On October 20, Beijing time, Tesla released its third quarterly report. Tesla's total revenue in the third quarter was $21.454 billion, up 56% from $13.757 billion in the same period last year, but below Wall Street expectations.
The financial report pointed out that the inflation rate of raw material costs, as well as the efficiency reduction caused by the Berlin Gigafactory, the Texas Gigafactory, and the 4680 battery production climb, all affected Tesla's profit margin. In addition, the US dollar continues to appreciate compared to all other major currencies in the Tesla market.
Still, looking ahead, Tesla still plans to ramp up production capacity as soon as possible. Car deliveries are expected to grow at an average annual rate of 50% in the coming years. The rate of growth depends on Tesla's equipment capacity, factory uptime, operational efficiency, and the capacity and stability of the supply chain.
Referring to Tesla's revenue less than expected, Zhang Xiang, a visiting professor at the Yellow River Institute of Science and Technology, told the Beijing News shell financial reporter that Tesla, as a leading enterprise, carries the expectations of consumers and investors on sales, market share, and technical level, and this expectation will also be reflected in stock prices and market capitalization. However, on the one hand, the world's established car companies and new car manufacturers such as the Volkswagen Group are making efforts to generate new energy, diluting Tesla's market share, on the other hand, Tesla, as a leader in the field of intelligent networking, still does not open a significant gap with other brands in vehicle assisted driving and cruising range.
Revenue falls short of expectations Capacity climbing affects profit margins
Financially, Tesla Motors' total revenue in the third quarter was $21.454 billion, up 56% from $13.757 billion in the same period last year, compared with $16.934 billion in the previous quarter. Net income was $3,292 million, an increase of 103% compared to a net profit of $1,618 million in the same period last year, compared to a net profit of $2,259 million in the previous quarter.
Despite the sharp rise in results, Tesla's third-quarter revenue was lower than Wall Street's previous estimate of $22.1 billion, and net profit was higher than expected $3.19 billion.
Tesla's third quarterly report shows that on the one hand, the increase in car deliveries and the year-on-year increase in the average sales price of vehicles; On the other hand, due to the impact of production restrictions in Shanghai in the second quarter, the average selling price of vehicles decreased month-on-month. Increased costs of raw materials, commodities, logistics, quality assurance and expedited costs.
The financial report also pointed out that the inflation rate of raw material costs, as well as the efficiency reduction caused by the Berlin Gigafactory, the Texas Gigafactory, and the 4680 battery production climb, all affected Tesla's profit margin. In addition, the US dollar continues to appreciate compared to all other major currencies in the Tesla market.
On a cash basis, Tesla's quarter-end cash, cash equivalents and short-term marketable securities increased $2.2 billion sequentially to $21.1 billion, primarily driven by $3.3 billion in free cash flow, partially offset by $900 million in debt servings.
Tesla plans to reduce transportation costs per vehicle and no longer "rush sales" at the end of the month
Tesla pointed out in its earnings report that the company's high-volume deliveries in the last few weeks of each quarter have led to increased transportation costs and logistics instability. As a result, Tesla began to transition to a smoother delivery cadence, based on which a large number of vehicles were still in transit at the end of the quarter. Tesla expects smoother factory logistics in the quarter to reduce transportation costs per vehicle.
Tesla remains focused on ramping up vehicle production as quickly as possible by boosting weekly production in Fremont and Shanghai, as well as ramp-up in Berlin and Texas. Despite the improvement, logistics volatility and supply chain bottlenecks remain looming challenges. Tesla continues to believe that battery supply chain constraints will be the main limiting factor for long-term growth in the electric vehicle market.
Specific to production capacity, Tesla's earnings report said that there were fewer parts supply problems this quarter, and the vehicle transportation capacity during the peak delivery period became more and more challenging. Tesla is gradually moving to a more balanced production and delivery structure for different regional markets.
In the U.S., Tesla will continue to implement solutions to further increase production at its Fremont plant. The Texas Model Y production rate continued to increase month over month during the quarter. In the third quarter, the total production of 4680 cells (cells sent into chemical production) increased threefold from the previous quarter. The first phase of delivery of Semi's electric truck is scheduled to begin in December 2022.
In Shanghai, after experiencing a reduction in production speed in the second quarter, the production rate of the Shanghai Gigafactory in the third quarter exceeded the previous quarterly record. The Shanghai Gigafactory remains Tesla's main export hub, supplying vehicles to most markets outside North America.
The energy storage business is challenged by the semiconductor industry
Energy storage has always been one of Tesla's important sectors.
According to the financial report, Tesla's energy storage installed capacity in the third quarter of this year increased by 62% year-on-year to 2.1GWh (gigawatt hours), which is the highest level reached by Tesla so far.
Tesla said the semiconductor industry's challenges still have a greater impact on the energy storage business than the automotive business. Consumer demand for energy storage products still exceeds our supply capacity. In Lehrop, California, Tesla's planned 40GWh (gigawatt-hour) Megapack plant is ramping up capacity to meet growing market demand.
In addition, Tesla's solar installed capacity in the third quarter increased 13% year-on-year to 94 MW. At present, the installed capacity of commercial projects may fluctuate, which has decreased year-on-year. But Tesla said residential projects grew year-over-year in the third quarter. The solar installation team continues to improve the installation efficiency to achieve higher installed capacity and better economic benefits.
It is worth noting that Supercharging has generated more than 3 times more revenue for Tesla compared to last year, and Tesla will continue to make the cost of more Supercharging stations change from fixed prices to fluctuating prices to better manage vehicle traffic at overcharging stations.
Looking ahead, Tesla plans to increase production capacity as soon as possible. In the coming years, car deliveries are expected to grow at an average annual rate of 50%. The rate of growth depends on Tesla's equipment capacity, factory uptime, operational efficiency, and the capacity and stability of the supply chain.
The ramp-up speed of production at the plants in Austin and Berlin will be affected by the successful introduction of many new products and manufacturing technologies in new production locations, as well as ongoing supply chain challenges. It takes time for the plant capacity to climb, as does the two plants in Texas and Berlin.
Tesla mentioned that the company has also made progress in the industrial production of the Cybertruck, and now plans to start production at the Texas factory after the Model Y model climbs. Initial deliveries of Semi's electric truck are scheduled to start in December 2022.
Beijing News shell financial reporter Lin Zi editor Xu Chao proofread Zhao Lin