Tesla Reports Q3 Earnings; Musk Discusses Cybertruck and Car Affordability.

Tesla reported its third-quarter earnings after the bell on Wednesday. Shares initially rose in after-hours trading, but later sank after CEO Elon Musk discussed the Cybertruck and the company’s focus on making its cars more affordable given the high-interest rate environment. Here are the highlights from the company’s report compared to Wall Street expectations:

-The Q3 2023 report marked the first time Tesla missed on both earnings and revenue since Q2 2019.

-Tesla executives mentioned plans to begin construction on a new factory in Mexico but emphasized the importance of bringing down the price of its cars before going “full-tilt” on the Mexico factory.

-Musk expressed concern about the high-interest rate environment, stating that people buying cars are primarily focused on their monthly payments. He stressed the need to make Tesla’s products more affordable for consumers.

-The company announced on Twitter that Cybertruck production remains on track for later this year, with first deliveries scheduled for November 30th at Giga Texas. However, Musk tempered financial expectations for the vehicle, stating that it would take a year to 18 months to become a significant positive cash flow contributor.

-Tesla’s automotive revenue for the quarter was $19.63 billion, while revenue from its energy generation and storage business was $1.56 billion. The portion of automotive revenue from regulatory credits grew significantly in Q3, reaching $554 million.

-The company reported GAAP net income of $1.85 billion, or 53 cents per share, and a total gross profit decline of 22% year-over-year. Total operating margin came in at 7.6%.

-Research and development expenses for the quarter were $1.16 billion, with the company noting that it had expanded its AI training compute and implemented necessary upgrades to enable further unit cost reductions.

-In Tesla’s energy business, energy storage deployment increased by 90% compared to the same period last year, but solar installations dropped by 48% year-over-year.

-Chief Accounting Officer Vaibhav Taneja now also holds the role of CFO after the previous CFO, Zachary Kirkhorn, stepped aside.

-Musk apologized for sounding “paranoid” about the economy towards the end of the earnings call and expressed concerns about ongoing global conflicts potentially impacting the economy.

Overall, Tesla’s Q3 earnings report showed mixed results, with the company missing on both earnings and revenue. However, Musk’s comments about the Cybertruck and the importance of car affordability for consumers highlighted the company’s focus on long-term success and growth.