Tesla Profit Falls Despite Rebound in Car Sales

Tesla's second-quarter profit fell sharply despite a rebound in vehicle deliveries, as the electric-vehicle maker slashed prices to boost sales. Net income dropped 45% to $1.48 billion from $2.7 billion a year earlier, the company reported after the bell on Tuesday. Revenue rose 2% to $25.5 billion, slightly above analysts' expectations, but operating margins narrowed to 6.3% from 9.6% in the prior quarter and 18.7% a year ago.

The results underscore the toll of Tesla's aggressive discounting strategy, which has eroded profitability even as it helped clear inventory and lift deliveries. The company delivered 443,956 vehicles in the second quarter, up 14.8% from the first quarter but still down 4.8% year over year. Automotive revenue, excluding regulatory credits, increased 1% to $19.9 billion.

Investors are closely watching Tesla's next moves, including the planned robotaxi unveiling in October and progress on the Cybertruck ramp. The company reiterated its focus on cost reduction and new product development, but did not provide a specific delivery target for 2024. Shares fell about 4% in after-hours trading following the report.

The earnings miss adds pressure on CEO Elon Musk to deliver on promises of autonomous driving and artificial intelligence. Tesla's cash flow from operations was $3.6 billion, while capital expenditures rose to $2.3 billion, leaving free cash flow at $1.3 billion. The company's cash and investments stood at $30.7 billion at quarter-end.