"The value of Tesla overwhelmingly is autonomy," CEO Elon Musk said on yesterday's Q2 earnings call. "These other things are in the noise relative to autonomy." Longtime Musk-watchers know that he doesn't always make good on the things he says, but he's certainly delivered on making everything but the big promises around autonomous driving feel like "noise." That's reflected in the company's latest financials, and its sales are declining as scores of other brands rise in EV sales.
Some analysis of yesterday's call leads off today's Critical Materials, our morning roundup of industry and tech news. Also on deck today: a company with actual driverless cars on the road gets more funding, and we offer a preview of the stark contrast the U.S. presidential election presents for the auto industry.
30%: What Now, Tesla?
For today's roundup, I was originally going to use the headline "The Electric Vehicle Age No Longer Belongs To Tesla." Considering its sales slide—all when countless other automakers like Hyundai, General Motors and Ford show record or greatly improving EV sales—and other declines like the growth in Supercharger deployments, that may yet be fair.
I'll hold off on saying that for now because it's not like Tesla hasn't had its wins lately. However, its market share is quickly declining; it remains the top EV brand by sales in America (and the world), and the Cybertruck appears to be America's top-selling electric truck. We have certainly given high marks to the updated Model 3.
But beyond that, we've never seen Tesla feel less like an electric car company—especially the one we've come to know over the past decade and change, the one that brought the whole industry to this point—than we did on yesterday's call.
Tesla's overall sales and automotive revenue are down, with profits hammered by the price cuts and aggressive deals. Supercharger growth is down, as we'll cover later today, the vaunted 4680 battery cells haven't delivered on their promises, and yesterday's call fastidiously avoided mention of new products. We know Americans want more affordable EVs, above all; Tesla still says they're coming, but with scant details.
“Plans for new vehicles, including more affordable models, remain on track for start of production in the first half of 2025. These vehicles will utilize aspects of the next-generation platform as well as aspects of our current platforms and will be able to be produced on the same manufacturing lines as our current vehicle line-up.” That's about all we get from the investor deck.
Why hold off on that hand grenade of a headline? Because we've all learned that it's unwise to bet completely against Tesla. However, the ratio of reality to promises feels more skewed toward the latter than ever, which, for Tesla, is really saying something.
Since Tesla feels more like a stock price that lots of people have bet a ton of money on, and less like an actual car company, here's the financial analysis from a rightfully skeptical CNBC:
Tesla shares dropped more than 8% in premarket trading in the U.S. after the electric car maker reported second-quarter earnings that missed expectations amid ongoing pressure in its auto business.
Bulls and bears have been in a grapple over the stock, with some believing its core car business is under pressure, while others remain hopeful about a future Musk has promised around autonomous driving, AI and robotaxis.
Robotaxis were a huge focus on the earnings call. Musk envisions a world in which owners can authorize their Tesla vehicle to be used as part of an Uber-style ride-hailing service — and where the cars would drive autonomously.
When asked when he expects the first robotaxi ride, Musk said, “I would be shocked if we cannot do it next year.”
Never mind the regulatory hurdles, questions about liability, or whether consumers even want this. Robotaxis are coming next year. Same as it ever was. And everyone is wondering where their Tesla NACS adapter is, as promised last year.
Meanwhile, though it has already raised $6 billion in Series B funding, Musk may ask shareholders to approve a $5 billion investment in his xAI startup. After the vote over his pay was approved earlier this year, there's scant reason to believe that won't happen if Musk wants it to.
60%: Waymo Gets A Big Boost From Google
Meanwhile, Google's Waymo—which, after the decline of General Motors' Cruise, is far and away the leader in the robotaxi space—is also getting juice. During Alphabet’s second-quarter earnings call (that's the parent company of Google itself) yesterday, officials announced $5 billion in additional funding, TechCrunch reports:
“This new round of funding, which is consistent with recent annual investment levels, will enable Waymo to continue to build the world’s leading autonomous driving technology company,” said [CFO Ruth Porat.]
Porat noted that Google will focus on improving overall efficiencies in its “other bets” segment, which includes innovative projects that are distinct from the tech giant’s core search and advertising business. Other companies in this segment are Verily, Calico, Google Ventures and drone company Wing.
“Waymo is an important example of this, with its technical leadership coupled with progress on operational performance,” Porat continued.
About three hours after the Waymo announcement, Musk posed the question of Tesla investing in xAI on his social media network. Jealous, much?
90%: The Auto Industry Has Never Faced A Fork In The Road Like This
With billions of dollars in EV and battery plant subsidies and tax incentives on the line, the auto industry has never seen such a stark difference in policy as it does ahead of the 2024 U.S. presidential election. On the one hand, former President Donald Trump has vowed to reverse policies that have spurred significant EV investment in the U.S. and North America; indeed, even Musk brought this up yesterday when asked about Tesla's planned Mexico factory.
"I think we need to see just where things stand after the election," he said. "Trump has said that he will put heavy tariffs on vehicles produced in Mexico. So it doesn't make sense to invest a lot in Mexico if that is going to be the case."
As Automotive News reports today, there's little reason to believe policies under President Kamala Harris—if she gets the Democratic nomination, which seems likely at this point—would be terribly different than those of President Joe Biden:
"I will end the electric vehicle mandate on Day 1, thereby saving the U.S. auto industry from complete obliteration, which is happening right now, and saving U.S. customers thousands and thousands of dollars per car," Trump said at the convention.
The Biden administration does not formally mandate EV production, but instead regulates tailpipe emissions and corporate average fuel economy standards that limit greenhouse gas emissions and encourage vehicle efficiency. Under the Biden administration's EPA, EVs are estimated to make up 30 to 56 percent of light-vehicle sales in the 2030-32 model years.
Harris would likely inherit much of Biden's climate goals if not go even further. As senator, she was an early co-sponsor of the Green New Deal in 2019, a controversial nonbinding resolution that would transition the country to 100 percent renewable energy within a decade.
She also called for the electrification of school buses and proposed a carbon tax during her 2020 presidential campaign.
When asked if Harris would back some of the more ambitious climate policies she supported as a senator, a Biden-Harris climate adviser told the New York Times that she would focus on implementing the climate provisions in the Inflation Reduction Act, from which she cast the tie-breaking vote.
And that's all before we get into the tariff and China stuff. I'm sure auto execs have a lot to say behind the scenes; many would probably welcome some inevitable Trump 2.0 corporate tax cuts, but if what Trump says about reversing the Inflation Reduction Act EV policies, it could cost them significantly more—now and in the long-term.
100%: Who's The EV Leader If Tesla Isn't?
If Tesla is really slowing down on the car front to work on delivering big AI and robotaxi returns for its shareholders, then who picks up the torch? In terms of cars you can buy in America, I'd say Hyundai Motor Group has a solid shot. But globally, the answer is probably a Chinese company. Do with that information as you will.
Contact the author: patrick.george@insideevs.com
