Tesla Reports $1 Billion Cash Burn and Profit Drop Despite Sales Growth
Tesla sold 480,000 electric vehicles in the second quarter of 2024, generating $28.2 billion in revenue, surpassing forecasts of $26 to $27 billion. Israel was among the markets with a 100% sales increase, delivering 3,200 vehicles by the end of June. However, Tesla's stock fell 3% after the company reported a 17% drop in net profit to $1.1 billion, with earnings per share at 33 cents, below the expected 55 cents.
The company burned through over $1 billion in cash reserves during the quarter and plans to spend an additional $25 billion this year, which is expected to further impact profitability. Tesla lost its title as the world's largest electric vehicle manufacturer to China's BYD last year and faces increasing competition from Chinese companies in all its markets.
The decline in profitability is also attributed to massive investments in producing the Cybertruck, the electric semi-truck, and especially the Optimus robot. Tesla halted production of the Model S and Model X to convert those lines for robot manufacturing, but none of these three products are expected to enter full-scale production this year. On a positive note, Tesla reported increased revenue from its charging network, expanded autonomous vehicle services, and growth in Full Self-Driving (FSD) subscribers.
In the post-earnings investor call, CEO Elon Musk did not rule out a future merger between Tesla and SpaceX, acknowledging a growing overlap between the two companies.
