Tesla likely to face 'a few rough quarters' from end of US EV support: CEO Elon Musk
Musk's electric vehicle maker posted the worst quarterly sales decline in more than a decade and profit that missed Wall Street targets, but its profit margin on making cars was better than many feared. Musk is pursuing autonomous driving to power privately owned vehicles as well as robotaxis that it plans to put into production next year.
In the meantime, it is working on a new, cheaper car, though Chief Financial Officer Vaibhav Taneja said that production would ramp up next quarter, slower than initially expected. It produced some initial units by the end of June. The company did not provide an update on its full-year deliveries forecast, citing the economy and timing of the new car rollout. "Tesla's disappointing results aren't surprising given the rocky road it's traveled recently," said eMarketer analyst Jacob Bourne. "A truly affordable model will hit the bullseye in terms of boosting sales if Tesla can effectively position it right without detracting from its higher-priced models."
The second straight quarterly revenue drop, with a 12% fall, comes despite the launch of a refreshed version of its best-selling Model Y SUV that investors had hoped would help revive demand. A 51% dive in sales of automotive regulatory credits, which other automakers who have difficulty complying with government emissions rules buy from Tesla, also hurt revenue and profit. Revenue fell to $22.5 billion for the April-June quarter from $25.50 billion a year earlier. Analysts on average were expecting revenue of $22.74 billion, according to data compiled by LSEG. Adjusted profit per share of 40 cents lagged the consensus of 43 cents per share. The automotive gross margin, which excludes regulatory credits, was 14.96%, above Wall Street estimates, helped in part by lower cost per vehicle. Tesla global deliveries dropped 13.5% in the second quarter, which was below Wall Street targets. The US government later this year is cutting $7,500 tax credits for EV buyers.
Autonomous ride hailing Tesla had said in April it would start producing the more affordable model by the end of the first half and sources had told Reuters the vehicle, a stripped-down version of its Model Y SUV, would be delayed by at least months. Tesla on Wednesday did not disclose any details of the model, how many units it had made, or how it would be priced. Musk responded to a question of what the vehicle would look like by saying, "It's just a Model Y," joking that he "let the cat out of the bag there." Tesla did say on Wednesday that it expects volume production of the long-promised cheaper vehicle in the second half of this year, raising hopes it will rekindle demand as it battles rising competition from cheaper EVs, especially in China, and a persistent backlash against Musk's far-right political views. The company also said it continued to expect volume production of its custom-built robotaxi - called the Cybercab - and Semi Truck in 2026.
Much of the company's trillion-dollar valuation hangs on its bet on its robotaxi service - a small trial of which was started in Austin, Texas, last month with about a dozen Model Y SUVs - and on its development of humanoid robots. "Autonomy is the story," Musk said on the conference call, describing plans to roll out autonomous ride hailing to about half of the US population by the end of this year. Tesla is looking for robotaxi regulatory approval in the San Francisco Bay Area, Nevada, Arizona, Florida and other places, he said, and the company is close to getting regulatory approval for supervised Full Self-Driving driver assistance software in the Netherlands. The robotaxi business was likely to have a material impact on financials around the end of next year, Musk said. Investors are concerned about whether Musk will be able to devote enough time and attention to Tesla after he locked horns with Trump by forming a new political party this month. He had promised weeks earlier that he would cut back on government work and focus on his companies. A series of high-profile executive exits, including a longtime Musk confidant who oversaw sales and manufacturing in North America and Europe, is also adding to the concerns.
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
&w=3840&q=100)
First Post
7 minutes ago
- First Post
How EV diplomacy between India and China runs on mistrust and minerals
As India courts foreign automakers like Tesla and VinFast, the uneasy road for BYD exposes deep fault lines between India and China in a post-Galwan world read more BYD is facing challenges in its effort to make inroads into the Indian EV market. Reuters Diplomacy and driving seem to have crossed paths in India — at least where Chinese automaker BYD is concerned. While a thaw appears to be setting in after bilateral ties went into deep freeze following the Galwan clash — which left 20 Indian and unspecified number of Chinese soldiers dead — the trust factor hasn't fully returned. For now, it's a case of classic doublethink, as George Orwell described in his novel 1984: one is compelled to believe that trust both exists and does not. STORY CONTINUES BELOW THIS AD A diplomatic thaw but with limits While India resumed issuing tourist visas to Chinese nationals starting last week after a five-year gap as the two countries continue to explore ways to mend their strained relationship to improve the 'facilitation of people-to-people exchanges', Bloomberg reported that BYD has been unable to obtain visas for its executives so far. According to the report, the Chinese EV giant has been holding board meetings and high-level business interactions in Colombo in Sri Lanka and Kathmandu in Nepal, and even as far away as Singapore to keep its business running in India. India has already turned down BYD's proposed $1 billion joint venture to set up a manufacturing plant with a local partner. As a result, the Chinese automaker remains ineligible for tariff concessions on imported electric vehicles that are offered in return for significant domestic production commitments. Critical minerals, critical vulnerability Of course, it isn't as one-sided as the Bloomberg report suggests. A report in The Economic Times, citing a State Bank of India study, notes that India's key industrial sectors — ranging from transport equipment to electronics — rely heavily on rare earth imports, with China being the dominant supplier. As a result, the ongoing curbs on Chinese rare earth exports could impact domestic production, weaken export competitiveness, and even affect the financial exposure of banks tied to these industries. Rare earth elements such as samarium, gadolinium, terbium, dysprosium and lutetium are indispensable in the manufacturing of permanent magnet synchronous motors — a core component used in electric vehicles and hybrids. These motors are also integral to electric power steering systems and other auxiliary functions in conventional internal combustion engine vehicles. China, which supplies nearly 80 per cent of the rare earth magnets used by Indian automobile manufacturers, halted export approvals for these critical components in April 2025. The move has triggered concerns across India's automotive sector, which is heavily reliant on uninterrupted access to these materials. India has ambitious plans to shift toward electric mobility, targeting 30 per cent of all new vehicle sales to be electric by 2030, according to the India Brand Equity Foundation. STORY CONTINUES BELOW THIS AD However, recent data from the Federation of Automobile Dealers Associations shows that EV penetration stood at only 7.8 per cent across vehicle segments in FY25, up marginally from 7.1 per cent in FY24. Given the current disruption in rare earth supply chains, India's 2030 EV target suddenly appears much more difficult to achieve. Although trade tensions and retaliation rarely benefit any industry in the long term, China's mixed signals — offering cooperation with one hand and restrictions with the other — do little to foster trust or long-term stability in this critical supply relationship. Tensions between India and China have spilled over beyond critical minerals. In March, China denied visas to several members of an Indian delegation — including local employees of BYD — who were scheduled to attend a major dealer conference in Shenzhen. For BYD, which aims to sell 5.5 million vehicles globally this year, expanding its footprint in international markets is essential. But limited access to the fast-growing Indian market poses a serious obstacle to meeting that goal. STORY CONTINUES BELOW THIS AD Tesla testing Indian waters Meanwhile, Tesla recently inaugurated a showroom in Mumbai, yet it has not committed to local manufacturing. As a result, it faces import duties as high as 110 per cent on fully assembled vehicles. Although most of Tesla's cars sold in India are imported, the steep tariffs — designed to protect domestic automakers — nearly double the cost for consumers. In addition, India caps sales volumes unless a model is certified as roadworthy under local standards, further complicating entry for foreign manufacturers. Tesla is now looking to expand its presence in India with plans to open a second showroom in Delhi. According to reports, the company has secured a 4,000-square-foot space in Aerocity near Indira Gandhi International Airport, with the monthly lease estimated at around Rs25 lakh. VinFast enters quietly, but boldly While Tesla and BYD continue to face regulatory and strategic challenges that are slowing their expansion in India, another foreign electric vehicle manufacturer has quietly entered the scene. As reported by Mint, Vietnamese automaker VinFast has launched its first showroom in Surat, Gujarat — marking its formal debut in the Indian market. This move comes ahead of the launch of its upcoming manufacturing facility in Thoothukudi, Tamil Nadu, reflecting VinFast's intent to establish a strong and sustained presence in India's growing EV sector.
New Indian Express
36 minutes ago
- New Indian Express
Tesla taps Samsung for AI6 Chips in $16.5 billion deal, Elon Musk says
Tesla CEO Elon Musk said Monday that tech giant Samsung Electronics will provide his company with its next-generation AI6 chips, following the South Korean firm's announcement of a US$16.5 billion deal. Samsung said Monday it had secured an eight-year agreement, without naming the client, describing it only as a "major global company" in a regulatory filing. Under the deal, the partnership -- effective from last Thursday -- runs through the end of 2033. "Samsung's giant new Texas fab will be dedicated to making Tesla's next-generation AI6 chip. The strategic importance of this is hard to overstate," Musk said on X. "Samsung agreed to allow Tesla to assist in maximizing manufacturing efficiency," he added, calling it a "critical point" in striking the deal. "I will walk the line personally to accelerate the pace of progress," he said, noting Samsung's Texas plant was "conveniently located not far from my house". The deal represents about 7.6 percent of Samsung's projected annual sales for 2024, the company said. It declined to confirm the client was Tesla, even after Musk's message, citing confidentiality. The agreement is expected to provide a major boost to Samsung, which has faced headwinds in its foundry business, lagging rivals SK hynix and Taiwan's TSMC in the race for cutting-edge artificial intelligence chips. Samsung Electronics is the flagship unit of South Korea's Samsung Group, by far the largest of the family-run conglomerates that dominate Asia's fourth-largest economy. The company said this month that it expected operating profit to fall 56 percent on-year and 31 percent from the previous quarter, citing a slump in its core semiconductor division. Experts have attributed the decline to weaknesses in its foundry operations, which involve contract-based manufacturing of chips designed by other companies.
Time of India
37 minutes ago
- Time of India
This Bezos-backed EV startup is betting you'll pay extra for a stereo in your petite pickup
When Will Haseltine saw images online of a small, boxy electric pickup from startup Slate Auto this past spring, he got on the waitlist right away. The sparse interior and crank windows reminded him of the no-frills pickups he grew up around in Memphis, Tennessee - but he was most enamored with the sub-$20,000 price tag. That price, though, factored in a $7,500 federal tax break, which is set to expire Sept. 30, a casualty of the budget package U.S. President Donald Trump signed into law earlier this month. Now Haseltine isn't sure the truck will fit his budget when it comes out, expected late next year. "The Slate was the first time that I looked at a car, wanted it, and could also really make it happen," said Haseltine, a 39-year-old musical instrument technician. Without the tax credit, he said: "That's just plain too much." Michigan-based Slate has raised $700 million from investors, including founder Jeff Bezos, and has racked up more than 100,000 reservations for its cars. But the company is launching into a tough U.S. market. A few years ago, the electric-vehicle space was awash in hopeful entrepreneurs looking to cash in on the global transition to electric cars. But U.S. EV sales growth has cooled as consumer interest has faded. The loss of federal tax breaks will further hurt demand, auto executives and analysts predict. Like other EV startups, Slate likely faces a long road to profitability. The EV business has proven to be a money loser for most industry players, partly because batteries remain relatively expensive. Even in China, where smaller, inexpensive EVs have proliferated and companies enjoy a cost advantage over Western automakers, most are unprofitable. Slate founders believe the company can overcome those obstacles by offering something that is in short supply in today's U.S. car market: affordability. The average new-vehicle selling price is above $45,000. "We are building the affordable vehicle that has long been promised but never delivered," Slate CEO Chris Barman said at a Detroit conference in July. The company has a chance to fill a void left by Tesla, which has backtracked on plans to introduce a mid-$20,000s electric vehicle. The startup has taken a bare-bones approach to its two-seat pickup, which is slightly smaller than a Honda Civic hatchback. How bare-bones? A stereo and power windows will cost extra. Slate hasn't disclosed the cost of such add-ons. 'It's a cool idea' Slate's creation started with an idea from Miles Arnone, the CEO of Re:Build Manufacturing, a Massachusetts-based startup that includes several former Amazon employees. Arnone believed workers needed better access to affordable vehicles. Arnone shared his idea with Jeff Wilke, the company's chairman and a former Amazon executive, and eventually, a small team was formed. The group hired Barman, who spent most of her career as an engineering executive at Fiat Chrysler, now part of Stellantis. Barman told Reuters recently that Slate will be able to absorb the loss of the $7,500 tax credit because the truck's price still will undercut competitors. The company plans to build the pickup at an old catalog factory in Warsaw, Indiana. Executives are taking steps to hold down costs, starting with a simplified design that uses about 500 parts in the truck's assembly, compared with a few thousand for a traditional truck. The plan to build all of its trucks in a basic package - what the company calls a "SKU of one" - allows customers to choose to add a stereo, center console, special lighting, and other features later. The pickup will be built with composite body panels in gray, with an option for a vinyl wrap. That will sidestep the need for a paint shop, which is one of the most expensive investments in a typical car factory. Slate's minimalist approach is a leap of faith that Americans will forgo creature comforts they have been increasingly willing to splurge on. Last year, U.S. buyers spent 33per cent above the base price on average, springing for higher-end trim packages and extra features, according to . That was up from 28per cent in 2014. But there is mounting evidence that new cars are becoming out of reach for many Americans. That could worsen under the effects of the Trump administration's tariffs, which threaten to increase prices on popular budget cars imported from Mexico, Korea and elsewhere. From that standpoint, Slate's price-conscious pickup might be hitting at the right time, said Paul Waatti, director of industry analysis at AutoPacific. "There's a growing appetite, especially among younger drivers, for vehicles that are more honest, more modular and less over-engineered," he said. "Slate taps right into that." Traditional automakers and startups have found mixed success rolling out larger electric pickup trucks in recent years. Now, startups like Slate and California-based Telo are focusing on smaller electric pickups. In a town hall meeting in early May, Ford CEO Jim Farley and Executive Chair Bill Ford told employees they admired the company's customer-centered ethos and focus on affordability. Tim Kuniskis, Stellantis' head of American brands, called Slate "super interesting" at a June event, while also questioning how affordable it would be for some shoppers once they added all the options they wanted. "The idea behind it, we've talked about that idea a million times," he said. "It's a cool idea."
