Tesla shares tank on sluggish vehicle volume growth outlook for 2024

Texas company's shares dropped almost 8% in after-hours trading

Tesla delivered 443,956 vehicles from April to June, beating market estimates of 439,300. Bloomberg

Shares of electric vehicle maker Tesla plummeted after the company predicted sluggish vehicle volume growth and failed to provide a definite timeline for its highly anticipated robotaxis during an earnings call on Tuesday.

The company said it expects a “notably lower” vehicle volume growth rate in 2024 compared to last year, as it is working on the launch of its next generation of vehicles and other products.

The Texas-based company, which produced more than 1.8 million vehicles last year, did not disclose the number of units it is aiming to make this year.

It said its plans for new vehicles, including cheaper models, remain on track for start of production in the first half of next year.

New vehicles will be produced on the same manufacturing lines as the current line-up.

This approach will help Tesla to “prudently grow” its vehicle volumes in a “more capex-efficient manner during uncertain times”, the company said.

“This should help us fully utilise our current expected maximum capacity of close to three million vehicles, enabling more than 50 per cent growth [in coming years] over 2023 production before investing in new manufacturing lines.”

The company’s stock, which has dropped more than 8 per cent in the past year, closed 2.04 per cent down on Tuesday.

After the announcement, it dropped 7.77 per cent to trade at $227.23 a share at 9pm New York time in after-hours trading.

Industry analysts said Tesla must accelerate its innovation efforts to stay competitive.

“Perhaps more than ever in the company's recent history, Tesla's investors need results … those will have to come fast – both for the humanoid robot and for the robotaxi,” Thomas Monteiro, senior analyst at Investing.com, told The National.

Tesla has not officially launched its robotaxi. It initially planned to unveil it on August 8, but the event was postponed until October to allow for further development and prototype production​.

The robotaxi is part of billionaire businessman Elon Musk’s vision for a fully autonomous ride-sharing service​.

Drop in net profit on reduction in vehicle prices

Tesla reported a 45 per cent annual drop in June quarter net profit to more than $1.4 billion, driven by a drop in average selling price of its vehicles. It was, however, 31 per cent up on a quarterly basis.

Revenue during the April-June period jumped 2 per cent to nearly $25.5 billion, exceeding analysts’ expectations of $24.7 billion.

It was the eighth straight quarter the company reported $20 billion or more in sales.

Earnings a share stood at 42 cents compared to the expected 62 cents.

The company's operating income decreased by 33 per cent yearly to more than $1.6 billion in the last quarter, while operating expenses surged 39 per cent to almost $3 billion.

Tesla said operating income was mainly affected by factors including reduced average selling price for vehicles, an increase in artificial intelligence and research expenditure, and a drop in vehicle deliveries.

In a letter to stakeholders, Tesla said it achieved record quarterly revenue despite a difficult operating environment, without divulging more details.

The company said its non-automotive business is becoming an “increasingly profitable part” of Tesla.

Revenue from the automotive division decreased 7 per cent to $19.8 billion, while its energy generation and storage unit – which sells big batteries for residential, commercial and utility use – increased 100 per cent to more than $3 billion.

Its energy storage business grew to a record of 9.4GWh of deployments in the second quarter of the year.

Car sales also included regulatory credits of $890 million in the last quarter, up from $282 million recorded in the same period last year.

Regulatory credits are certificates issued by government agencies that allow companies to emit a certain amount of pollutants.

In the context of Tesla, the company can sell these credits to other car makers who need them to comply with regulations.

This has provided a substantial revenue stream for Tesla in past quarters.

In November, Tesla delivered its first Cybertrucks, four years after the futuristic vehicles made their debut.

Cybertruck production more than tripled in the past quarter and remains on track to achieve profitability by the end of year, Tesla said.

Earlier, it said it could build more than 125,000 Cybertrucks in a year.