Tesla Shares Plunge Nearly 15% on Earnings Shock Over Discount Strategy

Tesla's stock plummeted nearly 15% after the company posted an unexpected drop in net profit driven by discount sales and retreated from previous targets related to robotaxis and Optimus robots.

Tesla shares closed down 14.5% at $319.69 on the New York Stock Exchange on the 23rd local time.

The drop wiped out $215 billion (approx. 317 trillion won) in market capitalization in a single day.

According to the Financial Times (FT), Tesla announced after the market closed the previous day that its second-quarter adjusted net profit fell 17.0% year-over-year to $1.2 billion.

This fell well short of the market consensus of $1.9 billion.

Although vehicle deliveries reached a record high of 480,126 units and revenue rose 26.0% to $28.2 billion, price cuts ate into profit margins.

The price cuts are seen as a recovery strategy to lure buyers back, following a sharp plunge in sales last year when CEO Elon Musk led government spending cuts as head of the Department of Government Efficiency (DOGE), drawing consumer backlash.

Excluding regulatory credits—revenue from selling excess carbon emission allowances from electric vehicle sales to other automakers—the automotive margin stood at 16.3%, missing the market expectation of 18.7%. The overall operating margin also dropped from 4.1% a year earlier to 1.4%.

RBC Capital Markets analyst Tom Narayan said, "Lower prices appear to have driven much of the strong delivery performance this quarter."

US sales remain sluggish in the wake of the elimination of the $7,500 EV tax credit.

Revenue from regulatory credits sold to competitors also plummeted from $439 million a year earlier to $146 million.

In contrast, Europe saw the most pronounced sales rebound, bolstered by high gasoline prices.

Amid the slump in its automotive business, Tesla is accelerating its pivot toward AI and robotics.

It is simultaneously pursuing investments in advanced semiconductor and power grid infrastructure for the Cortex-2 supercomputer cluster, alongside the groundbreaking of a semiconductor research facility as part of "TerraFab," a project pursued alongside SpaceX.

As a result, second-quarter capital expenditures (CapEx) surged 142.0% year-over-year, pushing quarterly free cash flow into negative territory at -$1.1 billion for the first time in two years.

Musk stated that he would maintain capital expenditures above $25.0 billion (approx. 36.8 trillion won) this year, describing it as "the fastest industrial-scale expansion of an American company since World War II."

However, contrary to this confidence, Musk dialled back related targets during the earnings conference call, the Wall Street Journal (WSJ) reported.

Robotaxis, which were promised in January to "service 25% to 50% of the US region within the year," are limited to operations in seven cities as of July; the 3rd-generation Optimus, promised for a demonstration during the first quarter, remains unreleased; and the Semi truck, which was touted in April as ready for "mass production soon," saw its target pushed back to "mass production starting within the year."

The WSJ pointed out that this plunge coincided with a broader sell-off driven by concerns over big tech's overinvestment in AI, alongside the guidance retreat.
※ Please note: This article was translated by AI and may contain errors.