Tesla Shares Drown After Elon Musk's Company Reports Drop In Automotive Revenue

The series of misfortunes does not appear to be stalling for Elon Musk's Tesla. The company released its quarterly earnings for the second quarter of the year (April–June) on July 23. These results were underwhelming for the EV marker. The EV maker reported a drop in its overall revenue.

Tesla Automotive Revenue Dips

This drop in revenue also impacted the company's shares as well.

The company, in an exchange filing, reported a 2 per cent increase in its overall revenue. But, when it comes to the company's revenue from its automotive business, the revenue dropped by a steep 7 per cent.

This steep drop in revenue from this avenue was buffered by other services of the company, including its expanding energy storage business.

The Musk-led company saw its revenue from the automotive business drop to USD 19.9 billion from USD 21.27 billion a year ago. According to a report from CNBC, these figures included regulatory credits worth USD 890 million.

When it comes to these regulatory credits, Tesla receives them, which are awarded to the company as it only sells EVs, and therefore, according to some, it makes money on the cars it does not sell. These credits, that the company gets for free can be sold at a huge profit to other automakers that can’t meet regulatory requirements.

Tesla Shares Drop

The company's prospects have wavered for the past few quarters. Previously, the company reported a dip in revenue and sales for the first time since 2020. Thereafter, the company shares also suffered.

In the recent past, the company shares have recovered steadily, rallying for 11 straight trading sessions before hitting the roadblock after its Robotaxi venture and its presentation were delayed.

However, the company's focus on AI-related avenues and Musk's own ambition to make Tesla an AI powerhouse and a tech company, more than a car company have come at a cost.

On Tuesday, July 23, the company shares dropped by a massive 2.04 per cent or USD 5.13, closing at the low of USD 246.38.

Published on: Wednesday, July 24, 2024, 12:50 PM IST