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Tesla reported weaker-than-expected quarterly profits on Wednesday despite increased auto sales, depressing shares in after-hours trading amid questions over massive capital spending plans.
Elon Musk’s fast-growing electric vehicle maker reported second-quarter profits of $1.1 billion, down about five percent from the year-ago level. That translated into 33 cents per share compared with analyst estimates of 53 cents per share.
Revenues rose 26 percent to $28.2 billion.
Tesla had impressed market watchers earlier this month when it released higher-than-expected second-quarter auto sales, due in part to a recovery in European markets.
But the company’s earnings press release said profitability was dented by lower vehicle sales prices, lower revenue from regulatory credits and unspecified “energy warranty-related charges.”
Another factor was a more than doubling in capital expenditures to $5.8 billion during the three-month stretch compared with the year-ago period. Tesla is embarking on a massive construction spree that Musk characterized on a conference call as probably the United States’ “fastest industrial scale up since World War Two.”
Tesla is participating with Musk’s other ventures, SpaceX and xAI, in Terabab, a $20 billion project in Austin that calls itself “the most epic chip-building effort ever.”
Tesla described progress on expansion initiatives as in line with plans, saying it began production of its “Cybercab” vehicle in Texas and that production of the Tesla Semi truck “remains on track” for 2026.
In another closely watched item, Tesla reported gains in subscribers to its “FSD” driver-assistance program, boosting revenues.
Musk faced questions about plans for scaling its robotaxi venture and benchmarks for assessing the company’s progress on it, telling analysts he was confident the product will enjoy bountiful consumer demand and that Tesla was working to achieve perfect or near-perfect reliability.
“How many nines of reliability do you need to scale?” Musk said. “Ideally, you want 99.99999, you know, percent reliable.”
