Tesla’s profits slide despite growing revenue as it pivots to robotics and AI

Tesla cars on the lot at the factory in Fremont, California. Photograph: Justin Sullivan/Getty ImagesView image in fullscreenTesla cars on the lot at the factory in Fremont, California. Photograph: Justin Sullivan/Getty ImagesTeslaTesla’s profits slide despite growing revenue as it pivots to robotics and AI Shares in Elon Musk company fall more 3% in after-hours trading, as earnings per share miss Wall Street expectations

Tesla reported its second-quarter earnings on Wednesday, disclosing far lower profits than expected. The company’s already beleaguered stock, which had fallen about 14% this year to date, dipped further following the earnings report.

Elon Musk’s automaker, once the pinnacle of his tech empire, has taken a back seat to SpaceX. Musk’s rocket and AI company held the largest stock market debut in history last month, turning the richest man on Earth into the world’s first trillionaire, though his net worth has since fallen from its peak.

Tesla revealed earnings of 31 cents per share, a measurement of profits divided by the number of outstanding shares, less than the 51 cents per share Wall Street predicted. Its revenue was $28.23bn against an expected $25.71bn. Shares in the company fell over 3% in after-hours trading immediately after the numbers were released. Last year’s second-quarter earnings were equally shaky.

SpaceX and Tesla stock has slumped this year, with the rocket company down about 26% since its debut. Tesla has, meanwhile, suffered from the end of electric vehicle tax subsidies in the US last year and increased competition from cheaper Chinese automakers.

Although Tesla missed revenue expectations in its last quarterly earnings report, the company revealed earlier this month that it exceeded Wall Street’s predictions for its second-quarter auto sales. The stark turnaround was driven largely by sales in Europe, where electric vehicle subsidies are still in place and gas prices have surged as a result of the US-Iran war, leading consumers to buy electric.

Tesla’s vehicle sales are no longer as crucial to its market performance as they once were, however, as the company has pivoted towards bets on robotics, autonomous driving and AI. Musk claimed last year that Tesla’s Optimus robot, which has not yet entered widespread production and already faces a slew of Chinese competitors, would be the biggest product of all time and end poverty.

On the earnings call, Musk once again claimed that Optimus would be the “biggest product ever”, but cautioned that it faced a number of hurdles given the technological advancements it would require and the difficulties of scaling its production.

“It’s one of the hardest things to solve to make an autonomous human robot that can do tasks,” Musk said.

The company’s driverless taxi service, Robotaxi, has become a major focus for Tesla as a potential new line of revenue. Tesla announced earlier in the week that it would add Tampa and Orlando to where Robotaxi can operate. The service is currently available in parts of Austin, Dallas, Houston and Miami.

Musk has for years declared that the autonomous driving service will have almost infinite demand and claimed that millions of the self-driving cars would soon be on US roads. As is frequently the case with Musk’s promises, he has failed to reach those lofty targets and rollout has been slow.

On Wednesday’s call, Musk suggested that the slow growth was out of an abundance of caution for safety and concern that if a Robotaxi killed someone it would generate negative headlines and a regulatory crackdown.