Tesla (TSLA) earnings Q3 2023

Tesla reported third-quarter results after the bell on Wednesday. Shares rose as much as 2.4% in after-hours trading after the report crossed, but then sank greater than 4% after CEO Elon Musk cautioned that the Cybertruck wouldn’t deliver significant positive cashflow for 12 to 18 months after production begins, and emphasized that the corporate is targeted on making its cars more cost-effective amid a high-interest rate environment.

Here’s what the corporate reported compared with what Wall Street was expecting, based on a survey of analysts by LSEG, formerly referred to as Refinitiv:

• Earnings: 66 cents per share adjusted vs 73 cents per share expected
• Revenue: $23.35 billion per share vs $24.1 billion expected

It was the primary time Tesla has missed on each earnings and revenue since its Q2 2019 report in July 2019.

Tesla executives said that they’re “laying the groundwork to start construction,” on a recent factory planned in Mexico. But Elon Musk said before Tesla goes “full-tilt” on the Mexico factory, the corporate is working to bring down the worth of its cars.

He said, “I’m fearful concerning the high rate of interest environment we’re in,” and said people buying cars are focused on how much their monthly payments can be. “If rates of interest remain high or in the event that they go even higher, it’s that much harder for people to purchase the automobile.”

He later noted, “I simply can’t emphasize enough how essential cost is…Now we have to make our products more cost-effective so people should buy it.” He said that bringing the price of Tesla’s cars down was akin to a “Game of Thrones, but pennies.”

The corporate announced on X (Twitter), now owned by CEO Elon Musk, that “Cybertruck production stays on the right track for later this 12 months, with first deliveries scheduled for November thirtieth at Giga Texas.” Individually, the Cybertruck account on Xsaid there’d be a “delivery event” on that date. The shareholder deck said the Cybertruck is in “pilot production” with the Texas factory capable of constructing 125,000 per 12 months.

On the earnings call, CEO Elon Musk tempered financial expectations for the vehicle, saying, “It will require immense work to succeed in volume production and be cashflow positive at a price that folks can afford,” with the Cybertruck. He also emphasized, “I just need to temper expectations for Cybertruck. It’s an amazing product, but financially, it would take a 12 months to 18 months before it’s a big positive cashflow contributor.”

The corporate still hasn’t announced exact specs or pricing for the Cybertruck.

Musk also noted that many shareholders want Tesla to advertise, and Tesla is currently promoting. (The corporate is not less than paying for cost-per-click ads online, which have been reviewed by CNBC.) But when Tesla ads provide individuals with details about great cars that they can not afford, that “doesn’t really help,” Musk said.

Throughout the quarter, the corporate reported $19.63 billion in automotive revenue and $1.56 billion in revenue from its energy generation and storage business. Inside automotive revenue, the portion from regulatory credits grew within the third quarter to hit $554 million, up from $282 million the previous quarter and $286 million within the third quarter last 12 months.

Throughout the same period last 12 months, Tesla reported $1.05 in adjusted EPS on revenue of $21.45 billion.

GAAP (non-adjusted) net income for the quarter was $1.85 billion, or 53 cents per share. Total gross profit declined 22% year-over-year. Total operating margin got here in at 7.6%, down significantly from the year-ago quarter’s figure of 17.2%.

The corporate wrote, in a shareholder presentation, “Our cost of products sold per vehicle decreased to ~$37,500 in Q3. While production cost at our recent factories remained higher than our established factories, we now have implemented crucial upgrades in Q3 to enable further unit cost reductions.”

Research and development expenses got here in at $1.16 billion, up from the year-ago quarter’s figure of $733 million. The corporate noted it had “greater than doubled the dimensions of our AI training compute to accommodate for our growing dataset in addition to our Optimus robot project.” 

Elon Musk previously revealed that Tesla is rewriting its driver assistance systems, marketed as FSD Beta within the U.S., using an end-to-end machine learning approach.

When pressed for updates on when Tesla may finally deliver a robotaxi-ready vehicle, or software that could make its cars secure to drive with no human manning the wheel, Musk didn’t offer a particular timeline. He said, “The entire cars we’re making and have made for awhile we consider are able to full autonomy.”

In its energy business, Tesla deployed 3,653 MWh in energy storage in the course of the quarter representing a 90% increase versus the identical period last 12 months, but its solar installations dropped by 48% 12 months over 12 months to 49 MW.

The Q3 2023 earnings call was Tesla’s first since its previous CFO, Zachary Kirkhorn, announced he was stepping aside. Chief accounting officer Vaibhav Taneja now holds each roles concurrently at Elon Musk’s electric automobile company.

Taneja, like Musk, emphasized that Tesla would remain “unflagging” in its “pursuit of additional cost downs for 2024,” where each engineering and factory operations were concerned.

Towards the top of the decision, Musk apologized for sounding “paranoid,” concerning the economy which he said could also be rocked by ongoing wars all over the world (alluding to the conflicts underway between Israel and Gaza, and Russia and Ukraine). Likening Tesla to a world-class ship, he said, “Even an amazing ship in a storm has challenges.”

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