06:46 AM EDT, 07/24/2024 (MT Newswires) -- Tesla (TSLA) shares dropped early Wednesday as the electric vehicle manufacturer's second-quarter earnings fell short of market expectations, impacted by lower vehicle prices and restructuring charges.

Adjusted earnings declined to $0.52 per share for the June quarter from $0.91 the year before, the company said late Tuesday, trailing the Capital IQ-polled consensus of $0.62. The stock fell 7.9% in premarket activity.

The company's operating margin fell 333 basis points year over year to 6.3%, impacted by reduced average prices and a decline in deliveries of its models S, 3, X and Y vehicles. Operating expenses increased to $2.97 billion from $2.13 billion in the prior-year quarter, mainly due to artificial intelligence projects and included restructuring costs of $622 million.

Tesla's competitors have discounted their vehicles "quite substantially," which caused headwinds for the company, Chief Executive Elon Musk said during an earnings call, according to a Capital IQ transcript. "We don't see this as a long-term issue, but really as fairly short term," Musk told analysts.

Revenue in the quarter increased 2% year over year to $25.5 billion, topping the Street's view for $24.74 billion. Automotive revenue decreased 7% to $19.88 billion, while the energy generation and storage segment climbed to $3.01 billion from $1.51 billion last year. Services and other revenue advanced 21% to $2.61 billion.

"The energy storage business continues to grow rapidly, setting a record in Q2 with 9.4 (gigawatt hours) of deployments, resulting in record revenues and gross profits for the overall segment," Tesla said in the shareholder deck. "We also saw a sequential rebound in vehicle deliveries in Q2 as overall consumer sentiment improved and we launched attractive financing options to offset the impact of sustained high interest rates."

Earlier this month, Tesla posted second-quarter deliveries of 443,956 vehicles, down 5% year over year, but ahead of the consensus on Visible Alpha of 438,900 vehicles.

Tesla reiterated that its vehicle volume growth rate in 2024 "may be notably lower" than last year as it seeks to launch the next-generation vehicle and other products. The company said its production plan for new vehicles, including more affordable models, is on track to start in the first half of 2025.

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