Tesla announced its third-quarter results after the bell, and executives addressed a wide range of issues on the earnings call, including macroeconomic concerns and CEO Elon Musk’s impending takeover of Twitter.
Shares fell about 5% after hours following the results.
Here are the results.
- Earnings: $1.05 against 99 cents per share (adjusted) expected, according to analysts polled by Refinitiv
- Revenue: $21.45 billion vs $21.96 billion expected, per Refinitiv.
Tesla’s net income (GAAP) for the third quarter of 2022 reached $3.33 billion, with automotive gross margins flat at 27.9%, exactly where they were in the second quarter of 2022. During the Same period last year, Tesla reported profits of $1.62 billion.
During an earnings call on Wednesday to discuss the results, Musk answered questions from shareholders about demand for electric vehicles and a potential stock buyback.
“I can’t stress enough that we have great demand for the fourth quarter and we plan to sell every car we make as far into the future as we can see,” Musk said. “Factories are running at full capacity and we deliver every car we make, while maintaining strong operating margins.”
Tesla is likely to make a “meaningful buyout” next year, he added, potentially between $5 billion and $10 billion pending board approval.
He also said optimistically, “I believe we can go far beyond Applecurrent market cap. In fact, I see a potential path for Tesla to be worth more than Apple and Saudi Aramco combined. That doesn’t mean it will happen or it will be easy.”
Shareholders quizzed Tesla executives on macroeconomic issues affecting their business in China and beyond.
“China is having a kind of recession” mainly in property markets, Musk said, “and Europe is having a kind of energy-fueled recession.” He added: “North America is in pretty good shape, although the Fed is raising interest rates more than it should, but I think they will eventually realize that and do it. drop again.”
In response to another question, Musk also talked about his pending acquisition. Twitter, saying “I think it’s an asset that’s been languishing for a long time but has incredible potential.” He then added, “Twitter’s long-term potential is an order of magnitude greater than its current value.”
Musk is expected to sell some of his sizable stake in Tesla to help fund the closing of the $44 billion private deal.
Third Quarter Revenue Details
Tesla’s auto revenue was $18.69 billion, a 55% increase from a year ago. Cost of revenue from the company’s core automotive business rose to $13.48 billion in the quarter, from $10.52 billion in the second quarter, in line with the increase in auto sales. Tesla’s auto regulatory credits accounted for 1.5% of auto revenue at $286 million for the quarter.
Tesla reiterated previous guidance in its shareholder filing on Wednesday, saying, “Over a multi-year horizon, we expect to achieve 50% annual growth in vehicle deliveries.”
The company reiterated that deliveries of its semi-electric heavy-duty truck will begin in December and confirmed that it is producing the Semi in Nevada, where it produces batteries for its vehicles in the United States. The Semi was first announced in December 2017.
Tesla offered no firm timeline for the start of production of its Cybertruck pickup, saying only that it would be produced in Texas after Model Y production ramps up there.
The company previously reported that its deliveries for the quarter ending Sept. 30 reached 343,000 and vehicle production reached 365,000. The deliveries are the closest approximation to Tesla’s reported sales. Shares have fallen more than 17% since that Oct. 2 weekend report.
As vehicle production and deliveries have increased, service has not kept pace and has been a sore point for many Tesla owners.
CEO Elon Musk said in July that he was “delighted to be working with Tesla Service to enable same-time service as often as possible! Applying Formula 1 crewing techniques to Teslas.”
But Tesla increased its store and service center locations by just 6% in the third quarter, adding 41 new locations from the second quarter of 2022. However, it added more mobile service vehicles to its fleet, than the service technicians use to drive to repair customers. ‘cars on site when possible. At the end of the third quarter, Tesla said it operated 728 retail and service locations, with a fleet of 1,532 mobile service vehicles.
Services and other revenue, which includes fees for customers who fuel their cars at Tesla boost stations, sales of Tesla-branded merchandise and out-of-warranty customer car repairs, reached $1.65 billion.
In its third-quarter earnings release, the company warned of a bottleneck in transportation capacity for new-car delivery in the final weeks of the quarter, and said it was “moving to a smoother pace of delivery”.
Tesla’s energy unit generated $1.12 billion in revenue for the quarter. This division sells backup batteries for residential, commercial and utility use, and installs solar roofs.
Energy revenue growth came primarily from sales of energy storage systems. The company said it installed energy storage systems with a capacity of 2,100 megawatt hours (or 2.1 gigawatt hours) during the quarter and noted that “demand for our storage products continues to exceed our capacity to ‘supply”.
Tesla’s energy division competes for battery cell supply with its automotive division and against other electric vehicle makers. Tesla wrote, in its shareholder filing, “We continue to believe that battery supply chain constraints will be the primary factor limiting EV market growth over the medium to long term.”