Tesla shares take a hit despite strong Q2: This week in EVs

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Tesla (NASDAQ:TSLA) held its Q2 earnings call this week, where the electric vehicle giant reported strong results with profits growing by 20% to $0.91 per share, surpassing the Street’s estimate of $0.79. Revenue for the quarter also increased by 47% to $24.93 billion, beating the consensus estimate of $24.29B.

Tesla’s CEO, Elon Musk, announced record vehicle production, deliveries, and revenue during the quarter, despite facing challenges such as high interest rates and macro uncertainty.

During the call, the billionaire CEO expressed confidence in the long-term potential of autonomy, stating that it will drive volume “through the ceiling” and that the company’s future robotaxi products will have significant demand.

He also highlighted the importance of artificial intelligence (AI) and the Dojo supercomputer in training Tesla’s Full Self-Driving (FSD) program, aiming to achieve a capability that is 10 to 100 times better than human driving. Musk believes that once regulators approve (FSD) and the value of Tesla’s fleet increases, it will be a significant step change in asset value.

Musk also hinted that Tesla was in early discussions with a “Major OEM” (original equipment manufacturer) to potentially license their (FSD) technology.

“We’re not trying to keep this to ourselves,” said Musk about the company’s FSD program.

After the call, shares fell by more than 9% as the company disclosed its intention to implement upgrades that they said could lead to a slowdown in production during the third quarter. Tesla also suggested that it may introduce further price cuts, placing additional pressure on margins, in an effort to stimulate demand.

Shares of TSLA ended the week down 10.12% to $260.02.

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The United States House of Representatives launched an investigation into Ford (NYSE:F) and its partnership with Chinese battery company CATL.

The Detroit automaker announced plans in February to use CATL’s technology as part of a $3.5B project to build a battery plant in Michigan. Republican chairs of the House Ways and Means Committee and the Select Committee jointly sent a letter to Ford seeking clarification on the deal, expressing concerns about potential reliance on Chinese inputs for electric vehicle battery manufacturing, and the exposure of “itself and U.S. taxpayers to the whims of the Chinese Communist Party and its politics.”

Ford defended the partnership, stating that it helps diversify the company’s supply chain and leads to less expensive and more durable batteries than current U.S. alternatives. They argued that the deal would create American jobs and advance battery technology while remaining committed to sustainability and human rights. However, newly discovered information has prompted the House investigation, casting doubt on Ford’s claims and raising concerns about the partnership’s implications.

Shares of F ended the week down 1.9%

In a separate legal/political issue developing in the electric vehicle segment, Governor John Carney of Delaware has officially signed a new law that will make it easier for Nikola (NASDAQ:NKLA) to double its existing shares.

Nikola failed twice to secure enough shareholder proxies to approve the increase of shares from 800 million to 1.6B, leading to two adjournments of the annual meeting. The new regulation only requires a majority of shares voting on the proposal (as opposed to a majority of outstanding shares), making it easier for Nikola to obtain approval for the share increase.

The Delaware-incorporated automaker has said that it already has sufficient votes for the increase under the new law. The next count will take place on Aug. 3.

Founder and former Executive Chairman Trevor Milton, who owns about 8% of Nikola shares, broke a nearly three-year silence on social media to urge shareholders to vote against the measure. Milton faces sentencing on three federal fraud convictions, and is involved in arbitration with the company concerning the reimbursement of a $125M fine the company agreed to pay to the Securities and Exchange Commission (SEC) related to Milton’s fraud cases.

Shares of NKLA ended the week up 15.82% following a significant 10.8% jump on Tuesday.

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