Electric vehicle (EV) maker Tesla (TSLA) reported mixed results for the second quarter after the market closed yesterday, dragging down its shares by 4.4%. Adjusted earnings per share (EPS) of $0.40 came in line with the consensus, while sales marginally surpassed expectations, despite recording the largest year-over-year drop to date of 12%. Analysts and investors closely followed CEO Elon Musk’s comments following the earnings release.
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Compared to the prior-year period, Tesla’s automotive sales plummeted 16%, and vehicle deliveries fell 13.5% to 384,122 units. Meanwhile, Tesla’s EV inventories surged 33% to a 24-day supply compared to Q2FY24. Tesla’s earnings also dropped 23% compared to Q2FY24. Despite the company’s declining performance, Musk expressed strong belief in Tesla’s robotaxi potential and the Optimus robot, with investments in the Optimus humanoid robot and AI infrastructure expected to exceed $10 billion this year.
Here Are Musk’s Key Notes on Tesla
Musk warned investors that Tesla could face a “few rough quarters” due to a shifting policy landscape and the elimination of EV credits. In Q2, Tesla’s auto regulatory credit revenue plunged 51% year-over-year to $439 million. Musk foresees tough quarterly performance continuing through Q2 of next year but believes Tesla’s economies of scale will become very attractive thereafter.
EV Sales – The Trump administration is repealing EV tax incentives on September 30, 2025, and Tesla’s sales could take a larger hit in the coming quarters. Even so, Musk noted that there is no shortage of demand for Tesla’s EVs. He added that there is a “very high desire” among people to buy a Tesla, but affordability remains a challenge. Taking advantage of this, Musk added that Tesla is making progress on manufacturing an “affordable EV” that would boost the company’s auto sales.
Robotaxis – Turning to Tesla’s robotaxi ramp, Musk said he expects the autonomous ride-hailing service to show rapid growth, with the geofenced area in Austin expected to increase within two weeks. Musk also said Tesla is on track to receive regulatory approval for launching robotaxis in the Bay Area, Nevada, Arizona, and Florida. Impressively, Musk stated that Tesla robotaxi service will be available in half the country by the end of 2025, assuming regulatory approval.
Optimus Robot – Finally, discussing Tesla’s Optimus robot ambitions, Musk said the company is working on developing the latest Optimus 3 robot, which will be its “biggest product ever.” The Optimus 3 prototype is expected to be ready by year-end, with production scaling up in 2026. Musk forecasts production of one million Optimus units within five years.
Is Tesla a Buy, Hold, or Sell?
On TipRanks, TSLA stock has a Hold consensus rating based on 14 Buys, 12 Holds, and six Sell ratings. Also, the average Tesla price target of $309.71 implies 6.9% upside potential from current levels. Year-to-date, TSLA stock has lost 17.7%.
