- Tesla's global vehicle sales dropped 13.5% in Q2, following a 13% decline in Q1
- The Cybertruck, Tesla's first new model in five years, has received lukewarm market response
- Tesla cancelled the $25,000 Model 2 to focus on an autonomous Cybercab without controls
Tesla's core car business is sputtering, but CEO Elon Musk is unbothered. The electric vehicle pioneer reported a 13.5 per cent drop in global vehicle sales for the second quarter, one of its worst stretches in years.
This follows a 13 per cent decline in deliveries during the first quarter. The company's only new model in five years, the stainless-steel Cybertruck, has received a lukewarm response in the market.
Rivals like General Motors and China's BYD have gained ground with new high-tech offerings, while US lawmakers consider phasing out EV tax credits. Consumers, too, are showing signs of shifting back to gas-powered vehicles.
"I'd encourage people to look beyond the bumps and potholes of the road immediately ahead of us," Musk told investors in April. "Lift your gaze to the bright shining citadel on the hill."
That "citadel," for Musk, includes ambitious bets on self-driving taxis and humanoid robots. Though Tesla generated nearly $100 billion in revenue last year, as per CNBC, three-quarters of it from car sales, Musk has made clear his focus is shifting.
He scrapped plans for a $25,000 budget car, the Model 2, in favour of an autonomous "Cybercab" without pedals or a steering wheel. "I think having a regular $25,000 model is pointless. It would be silly, like it will be completely at odds with what we believe," he said.
Company executives have instead looked to lower prices on existing models. "Monthly payment is the biggest differentiator for our vehicles," said Lars Moravy, Tesla's vice president of vehicle engineering, as per Forbes.
Still, the traditional car business, the backbone of Tesla, continues to falter. First-quarter profit fell 71 per cent, and the company only remained in the black thanks to $595 million in regulatory credit sales. Second-quarter results, due July 23, are expected to show a 10% drop in sales and nearly a 20 per cent decline in profit
Despite that, investor faith in Musk's long-term vision remains strong. Tesla's market valuation nears $1 trillion, vastly above what many analysts peg the core auto business at. "Most investors value Tesla's core auto business at between $50 and $100/share," Morgan Stanley analyst Adam Jonas said as per Bloomberg. Tesla currently trades around $300.
Complicating matters are Musk's ongoing political entanglements. He has spent nearly $300 million supporting Donald Trump's reelection, only to feud with him online over recent legislation. Trump responded by threatening action against Musk. "We might have to put DOGE on Elon," Trump said Tuesday, and suggested he would consider deporting him.
Tesla also recently parted ways with Omead Afshar, a longtime Musk confidant who oversaw North American and European operations. Earlier, Milan Kovac, head of the Optimus robot program, resigned to be with family overseas.
Musk remains focused on his next frontier: robotaxis.
