Elon Musk in the pic.:Expenses have surged as Tesla invests heavily in AI infrastructure
Tesla’s profit margin is under significant pressure due to substantial electric vehicle (EV) discounts and heavy investment in artificial intelligence (AI). In the second quarter, Tesla’s adjusted operating margin fell to 14.4%, its lowest in three years, missing Wall Street expectations. This decline, Tesla’s fourth consecutive quarterly drop, saw net income at $1.48 billion on $25.5 billion in revenue. To counter a fall in EV deliveries, Tesla has been offering substantial incentives and discounts, which have negatively impacted its automotive revenue, down 7% from the previous year.
Expenses have surged as Tesla invests heavily in AI infrastructure, aiming to advance autonomous driving and develop humanoid robots. Capital expenditures on AI infrastructure hit $600 million this quarter. Despite these challenges, CEO Elon Musk remains focused on long-term goals, particularly in vehicle autonomy. Musk announced a robotaxi unveiling event for October 10, anticipating autonomous ride offerings by next year. However, Tesla’s stock dropped 8% in extended trading following these results, reflecting investor concerns over the shrinking margins and increased competition in the EV market, especially from China.
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