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What the numbers said
The top line was the best Tesla has ever printed. Revenue reached USD 28.24 billion, up 26% on the same quarter a year earlier and ahead of the USD 25.71 billion analysts polled by LSEG had expected, while the core automotive segment brought in USD 20.52 billion, a rise of 23%.

Deliveries hit a record 480,126 vehicles, up 25% year on year, and energy storage deployments reached 13.5 GWh.

Everything below that line moved the other way. Operating income fell 57% to USD 398 million and operating margin sank to 1.4%, down from 4.1% a year earlier, as operating expenses jumped 47% to USD 4.35 billion.

Gross margin slipped to 16.8%, hurt by lower vehicle pricing and a sharp fall in regulatory credit income, a line that once delivered profit without effort.

Adjusted earnings came in at USD 0.33 per share. The size of the miss depends on whose consensus you use. LSEG had USD 0.51. FactSet had USD 0.55. Either way it was a substantial shortfall against a record revenue quarter.

Shares fell around 3% in after-hours trading on Wednesday. The heavier move came in Thursday’s session, when the stock dropped more than 12% and shed over USD 140 billion in market value, with the slide deepening during the earnings call itself.

Why the cash turned negative
The figure that unsettled investors most was free cash flow. Operating cash flow actually rose 85% to USD 4.70 billion, a healthy result. But capital expenditure surged 142% to USD 5.79 billion, producing negative free cash flow of USD 1.09 billion. That compares with positive free cash flow of USD 1.44 billion in the first quarter of 2026 and USD 146 million a year earlier.

It is worth correcting a figure circulating in some coverage. Several outlets have described a USD 3.3 billion cash burn. That number is the sequential increase in capital expenditure, not the cash deficit. The free cash flow shortfall was just over USD 1 billion.

So this is not a demand problem or a manufacturing problem. Tesla is generating more cash from operations than at any comparable point. It is spending faster than it earns, deliberately.

The company has raised its 2026 capital expenditure guidance to more than USD 25 billion, close to three times what it spent in 2025, with the money going towards AI infrastructure, robotics and the Optimus humanoid programme.

Chief financial officer Vaibhav Taneja confirmed the figure on the call, and Musk described 2026 as “a massive capex year,” arguing the investments would deliver strong returns. Musk also indicated capital spending would keep rising over the next two to three years.

A profit worth examining
Tesla reported GAAP net income of USD 1.11 billion, down 5% year on year. Here a caveat is needed. One outlet has reported that roughly USD 750 million of that figure came from a mark-to-market gain on Tesla’s stake in SpaceX, which would mean most of the quarter’s reported profit was a paper gain on a private company Musk controls rather than money earned selling cars or energy.

That claim comes from a single source and has not yet been corroborated against Tesla’s quarterly filing. If it holds, it materially changes how the quarter reads, because operating income was USD 398 million. Anyone relying on the point should check the 10-Q before treating it as settled.

Can the car business carry it?
There are real reasons for optimism on the automotive side. Analysts point to the fully ramped new Model Y, aggressive global pricing, the end of Musk’s DOGE role removing a reputational drag, and what one investor called the end of the EV slump that began in March 2024.

Full Self-Driving subscriptions are also becoming a visible recurring revenue line, though the specific figures cited on the call have so far appeared only in secondary summaries rather than in Tesla’s own materials.

Against that, the margin structure has changed. Tesla operated above 17% margins at the peak of its pricing power in 2022. It is now at 1.4%. The regulatory credit windfall that once flattered results has largely gone.

A business selling more cars than ever at thinner margins, while its subsidy income evaporates, is a weaker platform for funding multi-year moonshots than the same business two years ago.

The robotaxi question
This is where the gap between narrative and delivery matters most. Musk said last year that Tesla would scale its self-driving taxi service rapidly and launch in several US cities by the end of 2025, a target conditioned on regulatory approvals. Progress has been slower than that framing implied, and on Wednesday’s call the executive team took a noticeably more guarded tone.

Tesla now says Robotaxi is live in seven major metros, with several ramping unsupervised and San Francisco running supervised Full Self-Driving under a California permit. Cybercab production and public-road engineering tests began during the quarter, though the company describes these as steps before fleet deployment rather than deployment itself.

The mileage data supports two readings. Cumulative paid Robotaxi miles passed 2.4 million, up roughly 41% on the first quarter, and Tesla added Miami, Orlando and Tampa to its ramping-unsupervised markets, doubling active markets in a quarter.

Broken into quarterly increments, however, the service added roughly 900,000 paid miles in the second quarter, the same as in the first, meaning the quarterly rate held flat rather than accelerating. Both descriptions are accurate. Which one matters depends on whether you are measuring footprint or throughput.

Tesla says it recorded no notable incidents across more than 380,000 unsupervised miles. That is the company’s own figure and has not been independently audited.

On scale, the comparison remains stark. Independent trackers compiling operator disclosures and state filings put Waymo at roughly 3,000 vehicles across 11 US metros, around 500,000 paid rides a week and about four million autonomous miles weekly, while Tesla’s active Austin fleet is reported at around 20 vehicles despite unsupervised service covering the whole metro since June. Tesla’s robotaxi operation remains at an early stage and has yet to generate meaningful revenue.

Optimus, chips and the widening bet
The spending extends well beyond robotaxis. Tesla is pursuing Terafab, a chip manufacturing project shared with SpaceX and xAI, which Musk described as a dependency for Optimus.

The first Optimus production line is under construction, with mass production expected during 2026, though Musk conceded it is the hardest product Tesla has ever attempted to manufacture at scale, with almost every component requiring fresh development and a long capacity ramp ahead.

Tesla also more than doubled its onsite compute in Texas during the first half of 2026, with its Cortex clusters running above 90 MW and 115 MW.

None of these programmes is close to self-funding, and each carries an uncertain payoff date.

The cushion, and its limits
Tesla is not in financial distress, and it is important to say so plainly. It ended the quarter with USD 43.52 billion in cash, cash equivalents and short-term investments, up 18% year on year, with the sequential decline of USD 1.2 billion driven by the capex surge.

The quarter’s cash burn was also far smaller than analysts had feared, coming in at USD 1.09 billion against estimates closer to USD 3.64 billion.

A company with more than USD 43 billion in liquid assets and positive operating cash flow can sustain a USD 25 billion spending year without existential risk. The question is not solvency. It is duration and discipline.

The verdict
Tesla can afford this year. Whether it can afford three or four consecutive years like it, while margins sit near 1% and robotaxi throughput holds flat, is genuinely open.

The bear case is straightforward. The automotive engine is running at its thinnest margins in years, the subsidy income has shrunk, and spending is rising rather than plateauing.

The bull case is equally coherent. Record deliveries, growing subscription revenue, a strong balance sheet and a technological bet that, if it lands, reprices the entire company.

Musk spent much of the call describing Tesla as increasingly intertwined with SpaceX and xAI, citing Grok in the vehicles and Starlink in the Cybercab. Asked directly about a merger, he said there is “more and more overlap” between the companies but declined to discuss combinations on an earnings call.

That may be the most revealing signal of all. If the automotive business cannot indefinitely fund Musk’s AI ambitions alone, a restructuring that pools the capital of his empire starts to look less like speculation and more like a plan.

The post Can Tesla afford its robot dreams? What the Q2 numbers really show appeared first on International Finance.

If you stood on the corner of 4th and King in San Francisco Street Station late in 2025, you would have witnessed a quiet revolution. It wasn’t marked by flying cars or neon-soaked cyberpunk aesthetics, but by something far more mundane: a white Jaguar I-PACE pulling up to the curb, hazard lights blinking, with absolutely no one in the front seat. A mother, holding a newborn, steps out. She doesn’t thank a driver. She taps her phone, and the car silently merges back into the chaotic flow of traffic.

For a decade, the promise of Level Four autonomy (vehicles that can drive themselves in specific conditions without human intervention) was just that, a promise. It was perpetually “five years away.” But 2025 was the year the timeline collapsed. It was the year the “gamble” began to pay out for some, while others realised they were holding a losing hand.

Method vs mania

Nowhere was the divergence in strategy more palpable than in the United States, where the market split into two distinct realities. There was the methodical conquest of Waymo and the chaotic ambition of Tesla.

By the close of 2025, Waymo, the Alphabet-backed juggernaut, had effectively won the first round of the American autonomy wars. They were running a utility, not a test. With over 14 million paid trips logged in 2025 alone, Waymo had moved beyond the “science project” phase to become a genuine alternative to Uber and Lyft in cities like Phoenix, San Francisco, Los Angeles, and Austin.

The company, formerly known as the “Google Self-Driving Car Project,” stuck to its expensive, sensor-heavy approach, utilising LiDAR (Light Detection and Ranging), radar, and cameras to create a redundancy that allowed its “Driver” to see through fog, glare, and darkness.

Critics had long argued that this hardware stack was too expensive to scale. They were wrong. As the market matured, the cost of solid-state LiDAR plummeted from $75,000 a decade ago to under $500 per unit in 2025, allowing Waymo to wrap its cars in a digital safety blanket without breaking the bank.

The result? A valuation soaring to $126 billion following a massive $16 billion funding round. Investors like Andreessen Horowitz and Sequoia Capital bought tech, and also the only thing that matters in this industry: trust.

Contrast this with the turbulent reality in Austin, Texas, where Tesla finally launched its long-awaited “Cybercab” service.

Elon Musk had bet the house on a different philosophy, “Pure Vision.” The argument was seductive in its simplicity. Humans drive with eyes (cameras) and a brain (neural nets), so why does a car need lasers?

However, the gamble faced a harsh reality check on the streets of Texas. Without the precise depth perception of LiDAR, Tesla’s vision-only system struggled.

Data released by the National Highway Traffic Safety Administration (NHTSA) revealed a troubling statistic: Tesla’s robotaxi fleet in Austin was crashing approximately once every 55,000 miles. To put that in perspective, human drivers typically go nearly 500,000 miles between police-reported accidents.

While Waymo was scaling into Atlanta and Miami with a “boring” reliability, Tesla was fighting a PR war, forced to keep human safety monitors in their vehicles long after competitors had removed them. The market reacted brutally, with Tesla posting its first-ever annual revenue decline as the “robotaxi premium” in its stock price began to evaporate.

The Chinese industrial machine

While the US wrestled with these philosophical debates, China simply built the future. If the US approach was defined by corporate competition, the Chinese approach was defined by industrial inevitability.

In Wuhan, a sprawling metropolis of 11 million people, Baidu’s “Apollo Go” achieved the holy grail of the robotaxi industry in late 2025. They have grasped unit-level profitability. This was a demonstration of scale. With a fleet of over 1,000 remotely monitored vehicles in a single city, Baidu drove down operating costs until they dipped below the daily wage of a human driver.

The Chinese strategy relied on a “heavy” infrastructure model. Unlike US robotaxis, which are designed to be independent geniuses figuring out the road on their own, Chinese robotaxis communicate with the city itself. Smart traffic lights and roadside sensors beam data directly to the cars, letting them “see” around corners before they even arrive.

The ecosystem birthed a fierce competitive landscape. Pony.ai achieved a “clean sweep” of regulatory permits in China’s Tier-1 cities (Beijing, Shanghai, Guangzhou, Shenzhen), cementing its status as a heavyweight. Meanwhile, DiDi Autonomous Driving (the spin-off of the ride-hailing giant) began the massive task of cannibalising its own mothership. By integrating robotaxis into the main DiDi app in Guangzhou and running 24/7 service, they signalled to the world that the gig economy era of human drivers was drawing to a close.

For the Chinese players, the “gamble” was less about technology and more about export. Could they take this model global? The answer, it turned out, lay in the desert.

The deregulation sandbox

In 2025, the geopolitical centre of gravity for autonomous mobility shifted unexpectedly to the Gulf. The United Arab Emirates (UAE) and Saudi Arabia, hungry to diversify their economies, essentially hung an “Open for Business” sign on their highways.

Abu Dhabi granted WeRide the world’s first city-level fully driverless permit outside the United States and China. This was a commercial license to print money.

WeRide, along with Pony.ai, flooded the region with Chinese tech, finding a receptive market that US companies (hamstrung by export controls and data privacy concerns) struggled to penetrate.

In Riyadh, Uber partnered with WeRide to launch the Kingdom’s first robotaxi service. It was a strange-bedfellows situation: an American ride-hailing app dispatching Chinese autonomous vehicles on Saudi roads.

This highlighted a growing trend. There was a decoupling of the “app layer” from the “fleet layer.” Uber, realising it couldn’t win the hardware race, decided to become the universal interface for everyone else’s robots.

Awakening of the sleeping giant

For years, Europe had been the Old World in every sense, with conservative regulations and a scepticism of AI keeping robotaxis off the streets of Paris and Berlin. But 2025 was the year the giant woke up.

Facing the threat of irrelevant automotive industries, European regulators began to fast-track approval processes. The result was a flurry of announcements for 2026. Uber announced partnerships to bring Wayve’s self-driving technology to London, while Mobileye and Volkswagen are preparing to launch commercial services in Munich.

But perhaps the most interesting European story was Verne. Founded by EV visionary Mate Rimac, Verne unveiled a purpose-built robotaxi set to launch in Zagreb. Unlike the utilitarian “toasters” of Zoox or the retrofitted SUVs of Waymo, Verne promised a premium, design-forward experience, a reminder that in Europe, style still counts for something. Underpinning this global explosion was a quiet victory for hardware. The debate over whether to use LiDAR is largely over, and LiDAR won.

In 2025, the “Vision-Language-Action” (VLA) model began to take hold. Powered by chips like NVIDIA’s “DRIVE Thor,” which packs 2,000 teraflops of compute, robotaxis began to understand the world, not just measure it.

Old systems could tell you, “There is an obstacle at X coordinates.” The new VLA systems, utilising the same transformer architecture as ChatGPT, could understand, “that is a police officer gesturing for me to stop because of a parade.” Such semantic understanding was the missing link for operating in chaotic urban environments.

Moreover, the hardware became cheap. The solid-state LiDAR units that cost as much as a luxury car in 2015 were now being stamped out like smartphones. This deflationary pressure meant that companies like WeRide and Pony.ai could deploy redundant, hyper-safe sensor suites for a fraction of the cost of a human driver’s annual salary.

The friction of progress

However, the “Great Robotaxi Gamble” was not without its losers. As the technology scaled, the social friction became visceral.

In San Francisco, the “Cone Army,” protesters who disabled robotaxis by placing traffic cones on their hoods, evolved into more aggressive resistance. People slashed tyres and spray-painted sensors.

The demonstration was an incoherent scream against automation. For the ride-share driver in a Prius, seeing a robotaxi glide past represented an existential threat. In 2025, we saw the first real dip in peak-hour earnings for human drivers in saturated markets like Phoenix.

The robotaxis were taking the easy, profitable short trips, leaving humans to deal with the complex, low-margin edge cases.

Safety, too, remained a paradox. Waymo could legitimately claim a 10x reduction in injury-causing crashes compared to humans. Yet the public holds machines to a standard of perfection, not comparison. When a Waymo vehicle in Austin failed to yield to a stopped school bus repeatedly, it triggered a federal investigation and a media firestorm.

The AI understood the bus as a vehicle but failed to understand the social contract of the flashing red lights. It was a stark reminder that driving is as much a sociological activity as a physical one.

Pragmatism takes over

As we look toward 2026, the chips are stacking up on the side of the pragmatists. Waymo and the Chinese cohort (Baidu, WeRide, Pony.ai) have proven that the technology works if you are willing to pay for the hardware and do the grind of mapping and testing. They are building a utility: boring, reliable, and increasingly profitable.

Tesla, meanwhile, remains the wild card. Their gamble on “vision-only” and “end-to-end AI” offers a theoretical ceiling that is infinitely higher, a car that can drive anywhere, anytime, without maps, but a floor that is currently much lower. In 2025, the market showed us that in the transport business, boring wins.

The trillion-dollar race is no longer about who can build the car but who can build the business. The technology is here. The sensors are cheap. The capital is flowing. The only thing left to remove is the driver. And judging by the empty seats rolling down the streets of our cities this year, that train, or rather, that taxi, has already left the station.

The steering wheel didn’t disappear with a bang, but with a software update. And for the millions of people who will hail a robotaxi in 2026, the gamble has already paid off. They just want to get home.

The post The Robotaxi gamble pays off appeared first on International Finance.

Tesla had initially planned to cover the extra expenses brought on by the 34% tariff, but the subsequent hike to 125% made it impossible to import the required parts, which is why it was suspended. The Semi truck is expected to be produced in Nevada, and the Cybercab is expected to be produced in Texas.

“In response to the imposed tariffs, Tesla has pursued a strategy of enhancing the percentage of sourced components from North America over the past two years. However, this strategic adjustment has not alleviated the challenges posed by the global complexities inherent in Tesla’s supply chain. In a reported plea to President Donald Trump, Elon Musk, the CEO of Tesla, has underscored the pivotal role of a global supply chain in the manufacturing process, emphasising its importance,” Reuters reported.

Not only Tesla but other automakers also have voiced concerns about the higher expenses and possible operational disruptions, including Ford, General Motors, and Stellantis. The tariffs have also had an impact on industry-wide production schedules and consumer prices.

Donald Trump recently said that he was considering a modification to the 25% tariffs imposed on foreign auto and auto parts imports from Mexico, Canada, and other places. Those tariffs could raise the costs of a car by thousands of dollars, and Trump said car companies “need a little bit of time because they’re going to make ’em here.”

The long-term impacts on the US automotive industry and its competitiveness in the global market will be closely monitored by stakeholders as the situation evolves in the coming days.

Experts see the disruptions resulting from the 25% tariffs hindering innovation, apart from affecting the uptake of electric vehicles and, most importantly, forcing businesses to look into alternate sourcing and manufacturing markets.

Tesla is also seeking approvals from the American state governments as it plans to roll out a robotaxi service with a fleet of Cybercabs. In October 2024, it unveiled a robotaxi concept that had no steering wheel or control pedals and promised to start building the two-door model by 2026 at a price of less than USD 30,000. Tesla also plans to ramp up production of the Semi electric trucks in 2026 and accelerate deliveries of long-overdue orders to customers including Pepsi.

The impact on the key business plans for Tesla reflected how Donald Trump’s tariffs, which were meant to boost US local manufacturing, have hurt his ally Elon Musk, who has repeatedly said on his social media posts on X (formerly Twitter) that he supported free trade and objected to tariffs.

Tesla has also stopped taking new orders for Model S and Model X as China imposed a retaliatory 125% tariff on American goods. To make matters worse, the electric vehicle giant’s long-awaited plans for an affordable car, including a US-made, stripped-down version of its best-selling electric SUV, the Model Y, have suffered a setback as the production launch has reportedly been delayed.

Tesla promised affordable vehicles beginning in the first half of 2025, providing a potential boost to flagging sales. Global production of the lower-cost Model Y, internally codenamed E41, is expected to begin in the United States.

However, that would occur at least a few months later than outlined in Tesla’s public plan, Reuters stated, quoting its sources, who also offered a range of revised targets from the third quarter to early 2026.

Two of the people said Tesla aimed to produce 250,000 of the cheaper Model Ys in the United States in 2026. The new vehicle is also planned for eventual production in China and Europe.

“The less expensive mass-market vehicles have been widely anticipated by Tesla fans and investors who hope they will attract a fresh group of customers and reverse the EV maker’s falling sales and eroding market share. Tesla also has refreshed its original Model Y with exterior and interior changes. The Long-Range All-Wheel Drive version in the United States costs about USD 49,000, before a USD 7,500 federal tax credit,” Reuters reported further.

There were reports about the China launch of the E41 occurring in 2026. The E41 will be smaller and cost 20% less to produce than the refreshed Model Y. The timing of the rollout in Europe is not clear. Tesla is also planning to launch a bare-bones version of its Model 3 compact sedan.

The EV maker on January 2 reported its first decline in annual deliveries in 2024, and analysts expect sales to fall again in 2025 for several reasons, including damage to the brand reputation by Elon Musk’s close work with Donald Trump and support of far-right European politicians.

Elon Musk earlier promised a new, cheaper EV platform with cars expected to be priced as low as USD 25,000, but dropped that to prioritise robotaxi development. Tesla has increased North American sourcing for parts of many models over the last two years, which would reportedly decrease tariff exposure for the E41.

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The move is a reflection of the pressure faced by the EV giant in the form of dropping sales and an intensifying price war among automakers, as elevated interest rates have slowed the adoption of electric vehicles.

The company is now looking to focus on autonomous driving software, robotaxis and its humanoid robot Optimus, and analysts further see Elon Musk cutting his venture’s spending on certain teams to preserve cash for those projects. Tesla recently disclosed that it expected to book over USD 350 million in costs in the second quarter for the mass layoffs. The job cuts also included an exodus of top executives, including Drew Baglino, Rohan Patel, Rebecca Tinucci and Daniel Ho.

The company is reportedly working on “new models” that would use its current platforms and production lines, a move that is expected to let it better control capital expenditures, as per Reuters.

Along with these, add the poor timing displayed by Tesla by conducting Supercharger layoffs. And it has scaled back its plans for gigacasting manufacturing, in another sign that the EV maker may be panicking amid falling sales and rising competition.

The Gigacasting Mess

Tesla has been a leader in gigacasting, a cutting-edge technique that uses huge presses with thousands of tons of clamping pressure to die-cast large sections of the car’s underbody. In 2023, as the EV maker developed a new small-vehicle platform, it aimed to punch out the underbody in a single piece. The long-term goal was to radically simplify manufacturing and slash costs, as per Reuters.

However, Tesla has halted the effort, opting to stick with its more proven method of casting vehicle underbodies in three pieces: two gigacasted front and rear sections and a midsection made of aluminium and steel frames to store batteries.

“The decision to hold off on the potential manufacturing breakthrough marks another example of Tesla slashing short-term spending as it adjusts to falling sales and profit margins, softening EV demand globally, and intensifying competition from rival EV makers such as China’s BYD,” Reuters reported.

The company is focusing more on developing self-driving vehicles than on pushing for huge growth in EV sales volume, a move which may keep its investors happy.

Tesla has also halted the development of an all-new affordable car, often called the Model 2, which would have been the first vehicle it built with one-piece gigacasting. As per the reports, the automaker’s suppliers are now involved in adapting Tesla’s three-piece process for the next-generation vehicle.

Tesla initially backed gigacasting to reduce its long-term manufacturing costs. However, the process has a roadblock in the form of large initial investments, apart from being time-consuming to perfect.

“Experts in vehicle manufacturing said Tesla’s more conservative path on gigacasting is no surprise and in part reflects the pains it has experienced historically in launching complex and innovative vehicles on time. The automaker’s highly experimental Cybertruck arrived last autumn at a far higher price than predicted after substantial delays to work through manufacturing issues. Tesla is still struggling to produce the angular, stainless-steel pickup in mass-market volumes,” Reuters reported further.

Shedding Light Upon The Layoffs

Elon Musk abruptly firing employees in Tesla’s EV charging division has blindsided automakers gearing up to equip new vehicles for customers to use the Tesla Supercharger network, as per industry officials and analysts. In fact, Tesla’s industry peers General Motors and Ford struck deals in 2023 to give customers access to the network. The move even opened the door for Tesla to get federal subsidies to expand the reach of its North American Charging Standard (NACS) system.

Elon Musk’s decision to dismiss the head of the business, Rebecca Tinucci, and most or all of the staff that operated and maintained the system, according to two former employees and multiple postings on LinkedIn, left officials at automakers and Tesla suppliers uncertain about the future.

Andres Pinter, co-CEO of Bullet EV Charging Solutions, a supplier to the network, told Reuters, “As contractors for the Supercharger network, my team woke up to a sharp kick in the pants this morning.”

“Tesla has already been awarded money under the federal government’s NEVI programme,” he said, referring to the National Electric Vehicle Infrastructure formula programme to provide funding to states to deploy EV charging networks.

“There’s no way Mr. Musk would walk away from effectively free money. It may be possible Mr. Musk will reconstitute the EV charger team in bigger, badder, more Muskian way,” Pinter stated.

GM and Ford reacted to the news by stating they were not changing plans to equip their EVs with connectors that will allow drivers to recharge at Tesla stations.

Analysts believe that Elon Musk could have disbanded the existing Supercharger organisation to build a leaner and less expensive team to run the operations.

Elon Musk, however, stated that a business reorganisation was necessary every five years. Employees working under executives who “don’t obviously pass the superb, required, and trustworthy criteria” would lose their jobs, he added in an email to staff members, saying the corporation needs to be “totally hardcore” about the layoffs.

With declining sales and profitability that are down 55% year over year, Tesla is facing one of its worst financial circumstances in recent memory. In addition to dealing with the declining demand for EVs worldwide, the corporation is facing more competition in China and the US.

Sinking Profits

Tesla published its first-quarter earnings during a tumultuous period when sales and stock prices fell. Tesla’s net income was USD 1.1 billion on USD 21 billion in revenue, down 9% from USD 23.3 billion in 2023.

Automotive revenues fell 13% year-over-year. Operating costs fell by 37%. Net income for common stockholders fell 55%. Tesla has a negative free cash flow of USD 2.5 billion, indicating it has no cash after operating, capital, and noncash expenses.

The company’s car inventory climbed from 15 to 28 days last quarter. That significant rise indicates Tesla’s cooling demand issues.

Elon Musk received tough questions from investors about these numbers and recent allegations that the company has halted the development of Model 2. He delayed the project to focus on Tesla’s robotaxi. Investors expected the Model 2 to boost corporate growth.

The shareholder message claimed Tesla is utilising its production footprint to “introduce new and more affordable products.” It did not mention the Model 2.

Tesla reported weak sales earlier 2024, indicating that cooling EV demand and increased competition were hurting the company. Tesla shipped 386,810 vehicles in the first quarter, down 8.6% from 2023. The business expected 2024 growth to halt as it prepared to start 2025 vehicle manufacturing.

The Road Ahead

As Elon Musk made a sudden visit to China in April, he reportedly proposed testing Tesla’s advanced driver-assistance package in China by deploying it in robotaxis.

Before the full rollout of its Full Self Driving (FSD) functions, Tesla still needs to get approval to collect and transfer data that its cars need to train its driver-assistance features. Baidu, China’s major internet search company, has already concluded an agreement with Tesla, under which it will grant the car company access to its mapping license for data collection on China’s public roads.

With the mapping service license, Tesla will be permitted to legally operate its FSD software on Chinese roads and its fleets can gather data about the vehicle’s surroundings, such as road layouts, traffic signs, and nearby buildings.

All the above developments show Elon Musk’s “seriousness” about his robotaxi plans. And he has chosen China, the country where his venture faces the toughest competition, as the stage for launching the vehicle line-up. Will he stick to his plans in the coming months? That’s the billion-dollar question.

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