Disappointing figures

Second-quarter net income came in at $1.45 billion, down 45% year-on-year. Sales were up 2%, below expectations of 3%. Gross margin came in at 14.7%, the lowest in 5 years and below the consensus of 16.3%. Although it exceeded expectations in terms of delivery volumes for the quarter, the group is expected to suffer a 6.5% decline in the number of Tesla units delivered in the first half of the year. Higher costs and sluggish demand due to high interest rates are to blame. On the other hand, increasing competition from low-cost Chinese carmaker BYD threatens to take away Tesla's estimated 60% market share in America, and its nickname of "Magnificent" in the process.

As a sign of resistance, Elon Musk's group has announced that it will extend its range of affordable Tesla cars in 2025 with more attractive financing rates, and is playing the short circuit card by locating more production units in China and Europe.

On the other hand, the group is capitalizing on its efforts to innovate with its new Cybertruck pickup, which began deliveries at the end of 2023, and its driverless robot cab, details of which will be revealed in October.

Robots to save the day

Although its car manufacturing division (80% of sales) is down, the energy production and storage systems division (6% of sales) has made up for the damage, at least in part. Production of its 4680 batteries rose by 51% quarter-on-quarter. In the medium term, the group plans to make more concrete progress on its "Dojo" project to develop an AI supercomputer based on D1 chips built by the company itself, in order to reduce its dependence on NVIDIA GPU chips. But above all, he is counting on his new humanoid robot Optimus, compatible with human tasks, to give Tesla a new dimension. Elon Musk is counting on this project to usher in a new era of growth. In the long term, he estimates that with all these developments, Tesla's share of automotive revenues will fall to 50%.

"I think the long-term value of Optimus will exceed that of everything else in Tesla combined. So just consider a humanoid robot that can do pretty much anything you ask it to do. I think everyone on earth will want one. There are 8 billion people on earth. So, that's 8 billion right there. Then you have all the industrial uses, which is probably at least that many, if not a lot more. So, I suspect the long-term demand for generalist humanoid robots exceeds 20 billion units. And Tesla has the most advanced humanoid robot in the world and is also very good at manufacturing, which these other companies are not." Elon Musk, Tesla CEO.

Is the market convinced?

Not really, no. As usual, investors are only interested in the numbers. The stock fell by over 7% in after-hours trading, taking its annual loss to over 5%. If Tesla is to bounce back, it will have to be more rigorous in adapting to Chinese competition and moving forward with low-cost models. Otherwise, its growth is at stake.