Manufacturer of electric vehicles announces weaker-than-expected revenue and profit.
- Due to declining operating margin and rising costs, Tesla’s adjusted profit in the third quarter decreased 37% from the same period the previous year.
- Elon Musk’s plan to increase sales by lowering prices did not work out as planned.
- Tesla’s Q3 production was impacted by planned shutdowns for facility upgrades.
- Investors are concerned because Tesla has lost market share to EV rivals.
In the midst of a continuing price war that has reduced margins, Tesla (TSLA) released third-quarter numbers on Wednesday that fell short of analysts’ forecasts.
The manufacturer of electric vehicles reported that third-quarter revenue increased 9% to $23.35 billion, but adjusted earnings fell 37% to 66 cents per share.1 According to Visible Alpha’s survey of analysts, Tesla would post revenue of $24.3 billion and adjusted EPS of 73 cents.
Tesla claimed that lower car average selling prices, adverse foreign exchange effects, and higher operating costs associated with its Cyber truck, artificial intelligence, and other research and development initiatives had a detrimental impact on its profitability.
In the third quarter, operating expenses rose 43% while operating income fell 52% from the same period last year to $1.76 billion. In comparison to the third quarter of 2022, when it was 17.2%, Tesla’s operating margin decreased to 7.6%.
As a result of repeated price cuts on many of its models in response to sluggish domestic demand and growing competition from Chinese EV manufacturers like BYD Co. (BYDDY), Tesla’s margins have shrunk.
Tesla reported third-quarter deliveries, a proxy for sales, were 435,000, under expert expectations earlier this month. Production decreased from 480,000 in the second quarter to roughly 430,000 over the period. The corporation blamed planned downtimes for manufacturing upgrades for the drop in production.
The company now needs to ship a record 476,000 vehicles in the final three months of the year in order to fulfill its yearly target of 1.8 million vehicles shipped. In order to reach delivery targets, investors have urged Tesla to use advertising, a tactic the firm has previously shunned.