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Why Tesla's auto biz still has 'some fundamental challenges'

Shares of Tesla (TSLA) continue to fall on Wednesday morning after the company posted its second quarter results, with earnings missing estimates for the fourth straight quarter. CEO Elon Musk, on the company conference call, said that more affordable EVs are on track for 2025 debut. Citi US autos & auto parts analyst Itay Michaeli joins Catalysts to give insight into Tesla's recent performance, how the company might turn it around, and how the auto sector may play out moving forward. Michaeli says that gross margins for the autos business, excluding credits, fell short of analyst estimates, serving as "a reminder that the auto business does still have some fundamental challenges." When asked if the robotaxi can be a saving grace for the company, Michaeli responds: "I think it's all about the level of credibility in the actual deployment plan for Tesla. If the event is reminiscent of the 2019 Autonomy Day, that could receive some some pushback and disappointment. But if the company is able to actually leverage its advantages, which we think are really a low-cost robotaxi platform, the hardware costs, as well as, of course, their end-to-end AI capabilities, which are very strong into a credible deployment plan for robotaxi and other mobility services that could actually be perceived well." For more expert insight and the latest market action, click here to watch this full episode of Catalysts. This post was written by Nicholas Jacobino