Tesla shares fell 9% on Thursday following a disappointing earnings report that revealed sharp declines in revenue and profit, marking one of the worst quarters in the company’s history. Tesla’s earnings were impacted by multiple challenges, including the expiration of the federal EV tax credit for some U.S. buyers starting in October and the shrinking revenue from regulatory credit sales, a source that has brought Tesla $11 billion since 2019.
Yet during the earnings call, Elon Musk sidestepped those immediate issues and instead focused on Tesla’s future: robotaxis and the company’s humanoid robot, Optimus. He acknowledged that the company might face “a few rough quarters,” but failed to outline concrete steps to address the company’s current financial downturn. This lack of clarity disappointed many investors and analysts alike.
Market losing patience with long-term promises
Investors who were once willing to overlook Tesla’s short-term hurdles now appear to be demanding more immediate action. Garrett Nelson, an analyst at CFRA Research, noted that “investors are taking a more realistic view of the story at this point.” Nelson, who downgraded Tesla’s stock to neutral in April, highlighted that while Musk has succeeded in keeping attention on the long term, present-day headwinds are becoming impossible to ignore.
Wedbush Securities analyst Dan Ives commented, “The street is losing some patience,” even though he still believes in Tesla’s AI and autonomous driving vision. Meanwhile, Morningstar analyst Seth Goldstein said the company’s robotaxi service still requires extensive testing and a fully operational product may not be ready until 2028.
Robotaxi rollout and Cybertruck struggles
Musk reiterated bold claims about Tesla’s robotaxi ambitions. He projected the service would reach half of the U.S. population by year’s end. However, with only a small test launch in Austin, Texas, and strict regulations in states like New York where autonomous vehicles are not allowed, experts question the feasibility of such a timeline. Achieving this goal would require Tesla to gain permission in two new states every week for the rest of the year.
Similar doubts hang over the Cybertruck. Musk once forecast 250,000 annual deliveries, but sales of the Cybertruck and Tesla’s two other luxury models fell short of 80,000 for the entire year. In Q2 alone, sales of those models declined by 52%. This underperformance follows Tesla’s earlier promise of higher overall sales in 2024, which now seems increasingly out of reach.
Ben Kallo, an analyst at Baird, expressed concern over Tesla’s ability to meet its aggressive goals: “So far, Tesla has received a pass due to how ambitious these products are, but continued sluggishness in the auto business could cause more focus on the near term.” Investors may no longer be satisfied with ambition alone.
