Tesla exceeds expectations with record revenues of $28.1 billion, but profits fall
Tesla ended the third quarter with revenues of $28.1 billion, a rtecord figure and above analysts' expectations of $26.37 billion. Earnings per share, however, came in at 50 cents, less than the 54 cents the market was betting on, and net profits slipped 37% to $1.4 billion. Cash flow, in turn, reached a record $4 billion. The electric vehicle maker posted a gross margin of 18%, compared to estimates of 17.5%.
Tesla's performance is under scrutiny ahead of a vote on a new maxi compensation package for CEO Elon Musk, which could be worth up to 1 trillion over ten years if ambitious targets are reached. The group's annual general meeting will vote on the proposal, which reflects Musk's crucial role, on 6 November. The CEO and founder, who holds a 15 per cent stake in the company, has made it known that he wants to go up to 25 per cent in order to stay focused on the future and not pursue AI projects outside Tesla. The new package is worth an additional 12 per cent.
The limited launch of its self-driving 'robotaxi' service in Austin, Texas, earlier this year marked a key strategic shift, reinforcing investors' expectations that the company will move from pure vehicle sales to focus on self-driving technology. Although most of Tesla's current revenue still comes from vehicle sales, its $1.45 trillion valuation now largely reflects investors' bets on frontiers other than the car in the strict sense, robotics and artificial intelligence.
Musk claimed, as he often does, the coming revolution. "Honestly, it's going to be an earthquake," he said referring to autonomous vehicles. At the same time, Musk warned this year that Tesla might go through some difficult quarters in a transition period.
Tesla introduced cheaper 'Standard' variants of its Model Y and Model 3 vehicles earlier this month to push volume growth, reducing features and prices to make the vehicles more affordable after the expiration of a $7,500 US tax credit on electric vehicle purchases. The race in the US to grab the federal incentive before it expires at the end of September led the company to deliver a record number of vehicles in the third quarter.
