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Tesla’s Q3 results: Mixed signals and market reaction

Tesla’s results for the three months ending in September weren’t impressive, especially when compared to Netflix, which pleasantly surprised the market. However, they managed to partially reverse the nearly 5% slide in the electric vehicle (EV) maker’s shares during regular trading, with a modest 1.3% rebound by 8:30 am Sydney time.

In after-hours trading, Tesla shares briefly rose by 2.5% after the company released its third-quarter results, which fell short of expectations. However, they gradually declined as the after-hours session progressed.

The company reported revenues of $23.35 billion, slightly lower than the expected $24.16 billion. In the same quarter last year, Tesla reported adjusted revenue of $21.45 billion.

Automotive revenue reached $19.63 billion, while energy generation and storage revenue stood at $1.56 billion. Automotive revenue received a boost from regulatory credits, which grew to $554 million in the third quarter, up from $282 million in the previous quarter and $286 million in the same quarter last year.

Tesla’s statutory net income for the quarter was $1.85 billion, representing a 44% decrease from the $3.29 billion reported in the same quarter in 2022. Total gross profit also declined by 22% year-over-year, and the total operating margin sharply dropped to just 7.6%, compared to the year-ago figure of 17.2%.

In a presentation, Tesla stated, “Our cost of goods sold per vehicle decreased to approximately $37,500 in Q3. While production costs at our new factories remained higher than at our established factories, we implemented necessary upgrades in Q3 to enable further unit cost reductions.”

Research and development expenses amounted to $1.16 billion, up from the year-ago figure of $733 million. The company noted that it had “more than doubled the size of our AI training compute to accommodate our growing dataset as well as our Optimus robot project.”

In the energy business, Tesla deployed 3,653 MWh in energy storage during the quarter, marking a 90% increase compared to the same period last year. However, solar installations dropped by 48% year-over-year to 49 MW.

Earlier this month, Tesla informed investors that it produced 430,488 vehicles in the third quarter and delivered 435,059 units, which was approximately 30% higher than the previous year but a 7% decrease from the second quarter and fell short of the market’s expectation of 461,000 units.