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Tesla profits fall as R&D spending rises, shares dip
🇺🇸 United States /Economy & Trade

Tesla profits fall as R&D spending rises, shares dip

From PBS NewsHour · () English

Translated from English, summarized and contextualized by DistantNews.

At a glance

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  • Tesla's second-quarter profits fell to $1.11 billion, missing Wall Street expectations, despite a 26% increase in revenue to $28.24 billion.
  • The company significantly increased spending on research and development, up 49% year-over-year to $2.37 billion, to support future businesses like robotaxis and robotics.
  • Tesla shares dropped in after-hours trading following the earnings report, continuing a downward trend for the year.

Tesla reported a decline in second-quarter profits, with net income falling to $1.11 billion, or 32 cents per share. This figure fell short of Wall Street analysts' forecasts, which had predicted earnings of 53 cents per share. Despite the profit dip, revenue saw a substantial increase of 26%, reaching $28.24 billion, surpassing analysts' expectations of $26.42 billion.

The company attributed the profit decrease to a significant increase in investment in research and development. Spending in this area surged by approximately 49% from the previous year, totaling $2.37 billion. This heightened investment is directed towards building the infrastructure and AI software necessary for Tesla's future ventures, including its robotaxi and robotics businesses.

We're investing a lot in growing the core business and really preparing for the future.

— Elon MuskTesla CEO explaining the company's increased investment in R&D and future technologies.

CEO Elon Musk emphasized the strategic importance of this spending, stating during a conference call, "We're investing a lot in growing the core business and really preparing for the future," and promising "incredible returns." Chief Financial Officer Vaibhav Taneja indicated that capital expenditures are expected to rise further in the second half of the year, projecting full-year spending to exceed $25 billion. He also noted that capital expenditures will continue to grow for the next two to three years as the company expands its robotaxi fleet, enhances AI compute infrastructure, and increases production capacity for its Optimus humanoid robot.

Following the earnings announcement, Tesla shares fell 4.1% in after-hours trading. The stock had already closed the regular session 1.3% lower and is down nearly 17% year-to-date. The company did report a strong increase in vehicle deliveries, up 25% year-over-year to 480,216 cars, marking its second consecutive quarterly gain and exceeding analyst expectations. This improvement comes after a challenging period where sales had declined, and Tesla lost its position as the world's largest EV maker to China's BYD.

We're investing a lot in growing the core business and really preparing for the future, promising that the spending will yield 'incredible returns.'

— Elon MuskTesla CEO discussing the strategic rationale and expected outcomes of the company's significant investments.
DistantNews Editorial

Originally published by PBS NewsHour in English. Translated, summarized, and contextualized by our editorial team with added local perspective. Read our editorial standards.

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