SAN FRANCISCO — As Tesla Inc.’s profits continued to fall in the second quarter, CEO Elon Musk stepped up his support for former President Donald Trump’s desire to eliminate tax credits for electric vehicles, even if such a policy would likely hurt the company.
But the billionaire said he’s focused on the long term and that such incentives are irrelevant to him going forward. “Tesla’s value is, overwhelmingly, autonomy,” he said on an earnings call on Tuesday, highlighting the company’s focus on self-driving technology. “Everything else is just noise compared to autonomy.”
Musk’s comments came after Tesla reported disappointing results on Tuesday, with quarterly profit down 45% from a year ago. In an attempt to ease investor concerns, the CEO doubled down on his big promises for a self-driving future, saying the company would unveil plans for fully self-driving robotaxis in October.
But those plans have continued to be delayed and details have been scarce, leaving analysts and investors confused about the company’s future prospects. “Tesla investors need results, perhaps more than ever in the company’s recent history,” said Thomas Monteiro, senior analyst at Investing.com. “Results will have to come soon.”
Tesla reported that its second-quarter net income fell 45% to $1.48 billion, while sales rose 2% to $25.5 billion. Executives blamed the decline on a confluence of factors, including a global slowdown in EV sales and production interruptions, and were confident that sales would bounce back from the previous quarter. Tesla shares fell about 3% in after-hours trading.
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Musk had originally said the Cybercab would be unveiled in August, but said delaying the launch by a few months “allowed us to refine the robotaxi and add a few other things for the product launch.”
The CEO said he expects the first fully self-driving cars to arrive “probably by the end of this year” and that “I’d be shocked if we weren’t there by next year,” but added that “my previous predictions have been too optimistic.”
According to the National Highway Traffic Safety Administration, companies that want to operate non-compliant vehicles, such as robotaxis, which have no steering wheel or accelerator pedal, must apply for an exemption from the agency before operating them on public roads. As of last week, Tesla had not applied for an exemption for its robotaxis in the US, the NHTSA said in an email to The Washington Post.
Gene Munster, an analyst at Deepwater Asset Management, said Tesla’s thin profit margins have investors eager for the company to announce “the next thing,” but he remains optimistic about the company’s future given Musk’s bold bet on self-driving cars.
“No one else is trying to solve these complex problems like Tesla is. The company is committed to doing so,” he said.
Musk’s endorsement of Trump last week has put the spotlight on what he might gain or lose from a second term. The former president said he “loves” Musk but has vowed to “crush” the industry by gutting pro-EV regulations if elected. Musk, who now plays a major role in Republican politics, said removing EV incentives would be “devastating for our competitors” and only “a little hurt” Tesla.
But Jessica Caldwell, head of insights at Edmunds, an auto industry ratings and research firm, said Musk’s public support for the former president “could alienate Democratic consumers who are more likely to buy EVs.”
“Tesla’s road ahead is already fraught with obstacles due to increasing global competition and an aging product lineup,” she said. “Giving potential EV buyers a political reason not to buy a Tesla is probably the last thing the company needs at this point.”
