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Tesla (NASDAQ:TSLA) will report earnings on July 23 after the market closes. The Austin-based company heads into earnings with full-year estimates for the core auto business being revised down, but investors are still weighing the potential upside from the AI, FSD, robotaxi, energy storage, and Optimus initiatives.
The numbers
Analysts expect Tesla to report revenue of $24.7 billion and EPS of $0.62, which would compare with revenue of $24.9 billion and EPS of $0.91 a year ago for the quarter. Notably, Tesla has missed on the EPS line in three straight quarters. The company’s operating margin will be closely watched after it plunged to 5.5% in Q1 due in part to lower EV prices. Tesla is anticipated to report positive free cash flow due to an improved inventory position sequentially. Tesla already disclosed 443,956 deliveries for Q2 to beat the consensus estimate for a tally of 439,302 vehicles. The electric vehicle maker said it produced 410,831 vehicles during the quarter. Tesla (TSLA) noted that 2% of the deliveries were subject to operating lease accounting. Model 3/Y deliveries for the quarter were 422,405, while other models accounted for 21,551 deliveries.
Energy, FSD, and robots
The stalling growth in the automotive business has raised the stakes for Tesla (TSLA) to show promise in other areas. A key focus will be on the expected trajectory of the energy storage business after Tesla (TSLA) deployed 9.4 gigawatts per hour of energy-storage products in the quarter to mark its highest quarterly deployment ever. Morgan Stanley now forecasts Tesla’s (TSLA) energy business to reach 100GWh in storage deployments by 2028, which is three years earlier than its prior forecast for that level of demand. The firm noted that energy storage demand is accelerating globally amid surging generative AI needs, and Tesla (TSLA) is positioned to grow its share in that market. Morgan Stanley now values Tesla (TSLA) Energy at $50 per share, up from a prior valuation of $36. That brings the total value of the energy business to $183 billion, vs. the prior valuation of $131 billion. Notably, Tesla (TSLA) Energy has a higher margin profile than either the solar deployment business or the auto business. It is also more tangible than either the Optimus humanoid or robotaxi concept, with customers already lining up. As for FSD, analysts are looking for the company to quantify the FSD adoption rate so they can model the financial impact. In terms of the Optimus business, investors may want to hear a timeline for the commercial upside. Barclays analyst Dan Levy and his team believe that Tesla’s (TSLA) has a clear lead in both the global electric vehicle transition and with the emergence of the software-defined vehicle. Tesla’s (TSLA) positive trajectory on volume is also anticipated to position it very well in the long term. However, the Barclays view is that details are needed on the actual master plan. Levy pointed specifically to Tesla’s (TSLA) shift in investment thesis away from growth driven by vehicle manufacturing and instead emphasizing AV/AI businesses such as its robotaxi. “While we appreciate the potentially disruptive opportunity from these businesses, we believe they cast uncertainty on the path ahead for Tesla, making the success of the stock dependent on bets with seemingly binary outcomes,” he warned.
The earnings call wildcards
Elon Musk will be on the hot seat to update on the timing of the robotaxi event and what to expect in terms of a low-cost vehicle for the mass market. The robotaxi discussion could steer right into Tesla’s (TSLA) embodied AI capabilities beyond app-based autonomous cars. Tesla’s Master Plan 4 is expected by some to be underpinned by its commercial ambitions in AI, robotics, and hybrid compute (including distributed thermal and compute in the car) that span from cloud to edge. Another key earnings call topic could be how investors should view the threat of disruptions in the semiconductor industry after the U.S. government said it might impose further export curb controls on the chip industry and former President Trump questioned whether the U.S. should pay for Taiwan’s defense. The fear in the EV sector is that a trade war over chips would reverberate across suppliers and impact key U.S.-China partnerships. It’s also possible that Musk could be asked about the presidential race and his strong endorsement of Donald Trump after he stated publicly that he would not financially back either candidate. For investors, there could be concerns about backlash against Tesla as Musk increases his political involvement.
The usual suspects
The auto stocks that correlate closest to Tesla (TSLA) after its earnings report are Rivian Automotive (RIVN), Lucid Group, and surprisingly, Ford Motor (F). Another stock that could get a callout on the earnings call is Nvidia (NVDA). For its part, the Santa Clara-based chip giant said last quarter that it supported Tesla’s (TSLA) expansion of its training AI cluster to 35,000 H100 GPUs and noted the company was a Blackwell time-to-market customer.
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