Tesla Struggles with Lower Profits and Missed Earnings Amid Production Challenges

Tesla's recent earnings report reveals its lowest profit margin in over five years, missing Wall Street targets due to price cuts and increased spending on AI projects. The company expects new vehicle production by mid-2025 but faces competition and declining demand. Shares fell 7% in after-hours trading.

Tesla, on Tuesday, reported its lowest profit margin in over five years and missed Wall Street earnings targets in the second quarter. The electric vehicle maker cut prices to stimulate demand while increasing its spending on artificial intelligence projects.

The company announced that it's on track to produce new, more affordable vehicle models in the first half of 2025. However, these models will yield less cost reduction than previously expected. Consequently, Tesla's shares fell 7% in after-hours trade.

The quarter was challenging, with CEO Elon Musk prioritizing lower-cost models over a new cheaper car and working on self-driving taxis. Despite laying off over 10% of its workforce to cut costs, increased operating expenses driven by AI projects weighed down profits.

(With inputs from agencies.)