During Tesla's earnings call, Elon Musk faced questions about its aging lineup, the Robotaxi delay, and concerns about the carmaker's AI chip supply.
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Tesla's problems are piling up.
During Tesla's analyst call on Tuesday after its second-quarter earnings report, Elon Musk faced questions about the carmaker's aging lineup, the delay of its Robotaxi event, and concerns about the carmaker's AI chip supply.
Tesla missed earnings estimates while reporting better-than-expected revenue in the quarter. Its adjusted earnings margin also dropped from 18.7% to 14.4% year-over-year as the company executed price cuts in an attempt to drive sales amid a challenging demand environment.
Musk had little to reassure investors on Tuesday night, and those eager to hear details about Tesla's upcoming vehicles were likely disappointed.
The Tesla CEO confirmed Tesla's Robotaxi event had been delayed until October 10, but didn't have much to say on when the first Robotaxi rides on the autonomous service could be expected.
Regulatory approval for the Robotaxi and its unsupervised full self-driving technology will also be a key hurdle for Tesla to overcome. While Musk said he was optimistic Tesla's self-driving efforts would receive regulatory approval — he said he would be "shocked" if the first Robotaxi ride wasn't possible next year — he was unable to give a clear timeline and conceded he tended to be optimistic about them. Musk argued regulators would have a "moral obligation" to approve Tesla's autonomous technology when shown the driving data.
The Tesla CEO also gave vague answers to questions regarding Tesla's updated Roadster and a next-generation, lower-cost vehicle. Musk said the company would unveil its cheaper EV in the first half of 2025, but failed to give any further specifics about the product — which Tesla has been promising for years.
He also faced some tough questions during the call, including about how he makes resource-allocation decisions between his multiple companies.
Specifically, he was asked about a news report that he had diverted a shipment of Nvidia GPUs originally intended for Tesla to his other ventures, X and xAI. Musk attempted to spin the move as actually beneficial to Tesla, as the carmaker had lacked the infrastructure at the time to use the chips.
But minutes earlier, the Tesla CEO had expressed concern regarding the carmaker's access to Nvidia's AI chips in light of the high demand for them amid the AI arms race, adding that Tesla aims to eventually supplement the chips with its Dojo supercomputer, which is still in the process of being built.
One bright spot was Tesla's energy storage business, which the company revealed set a record during the quarter for profits in the segment. The company also brought in $890 million in revenue from selling regulatory credits to automakers whose fleets didn't meet emissions requirements — a huge increase over last quarter.
Despite Musk's optimism that the company would solve autonomy and eventually achieve a $5 trillion valuation, investors appeared unconvinced.
By the time Musk had signed off from the earnings call, the carmaker's stock had tumbled more than 7% in after-hours trading.
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"In our experience, once we demonstrate that something is safe enough or significantly safer than human, we find that regulators are supportive of deploying deployment of that capability," Musk says, adding that he thinks regulators will have a moral obligation to approve Tesla's Full Self-Driving software if the data of miles driven show it is safer than human drivers.
Musk says Tesla is likely to receive regulatory approval in Europe and China by end of the year.
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He says Tesla has completed most of the engineering, but there are still some upgrades he wants to make to the vehicle.
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Some of the top questions going into Tesla's earnings call revolve around new products, according to Tesla's anonymous Q&A forum. Retail investors can submit questions on the forum and vote on their favorite ones.
According to the platform, shareholders want to know about Tesla's timeline for its updated Roadster, as well as the potential for a Tesla van. Another popular question revolves around Tesla's upcoming Robotaxi event.
Musk acknowledged earlier this month that Tesla had decided to delay its Robotaxi event, which was initially set to take place August 8, so that the company could make a design change he requested.
Tesla has yet to provide a new date for the event.
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Tesla said the $622 million also included some other unspecified costs.
In April, Musk announced more Tesla layoffs, telling staff that the company planned to reduce its total workforce by more than 10%. The company instituted a series of layoffs over the course of several weeks.
Tesla has since posted hundreds of job openings on its careers page.
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Tesla's stock price is likely around 20% above its fair value, Morningstar analysts estimated.
"Accordingly, we recommend investors wait for a larger pullback and for shares to trade below our fair value estimate with a solid margin of safety before we recommend a good entry point into the stock," Seth Goldstein, a stock strategist at Morningstar, said in a recent note.
The firm maintained its three-star rating on Tesla stock and assigned a fair value of $200 per share, implying 20% downside.
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Artificial intelligence remains central to Tesla's growth story, Oppenheimer analysts said.
Tesla's full-self driving technology could potentially raise earnings per share by $1-$2 a year through the end of the decade, the analysts estimated in a recent note. Meanwhile, the firm could reap as much as $1.7 billion in value from its Robotaxi market, they added.
"While TSLA delayed its AI, driving some modest softness in shares, we believe the value of its AI platform remains at the center of the TSLA valuation debate," analysts said, reiterating their "perform" rating on the stock.
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Tesla is still poised to reach a $1 trillion valuation, assuming that the carmaker continues to make headway on AI initiatives, Wedbush said.
"The key for Tesla's stock looking ahead is the Street recognizing that Tesla is the most undervalued AI play in the market in our view with a historical Robotaxi Day ahead for Musk and Tesla," the firm added.
Tesla stock skidded lower last week after Musk said the company's highly-anticipated Robotaxi Day would be pushed out to early October. But a delayed Robotaxi unveiling doesn't change Tesla's long-term growth trajectory, analysts said.
The firm maintained its "outperform" rating and $300 price target, implying another 35% upside from the stock's current levels.
