Tesla’s Q3 2023 Earnings: Resilience in the Face of Challenges

Tesla (NASDAQ:TSLA) released its Q3 2023 earnings report after the market closed on October 18, 2023. The report, detailed in the Q3 2023 Update Letter, came after a challenging quarter marked by reduced production and deliveries, partly due to the upgraded Model 3 rollout in Gigafactory Shanghai. Despite these challenges, Tesla managed to produce 430,488 vehicles and deliver 435,059 units, aligning with its annual target of 1.8 million vehicles for 2023.

Revenue Insights:

• In Q3, Tesla reported revenues of $23.35 billion, slightly below the expected $23.9 billion.
• The 9% YoY revenue growth was influenced by increased vehicle deliveries and company growth, although the average selling price of vehicles decreased.

Earnings Per Share: 

• Tesla’s non-GAAP earnings per share for Q3 2023 stood at $0.66, falling short of the anticipated $0.72. GAAP earnings per share also fell below expectations at $0.53, compared to the expected $0.64 per share.

Profitability and Operating Margin: 

• Despite challenges, Tesla maintained a 7.6% operating margin in Q3, posting a $1.8 billion GAAP operating income, $1.9 billion GAAP net income, and $2.3 billion non-GAAP net income.
• This profitability underscores the robustness of Tesla’s business model, although there was a decrease in operating income YoY.

Financial Position:

• Tesla ended Q3 with $26.1 billion in cash, cash equivalents, and investments, marking a sequential increase of $3.0 billion. This rise was attributed to financing activities and free cash flow.

Key Updates:

• Notable developments included Tesla’s expansion of its AI training compute, essential for its growing dataset and Optimus humanoid robot program. Additionally, the company announced the first Cybertruck delivery event scheduled for November 30, 2023.
• Gigafactory Texas reached a Cybertruck capacity of 125,000 units per year, and Gigafactory Shanghai adjusted its annual output to over 950,000 vehicles. Furthermore, Tesla’s Full Self-Driving (FSD) Beta achieved a milestone with 525 million cumulative miles, and Tesla Energy deployments hit a record high of 4.0 GWh in Q3 2023.

In summary, Tesla’s Q3 2023 earnings showcase the company’s resilience amidst challenges, reflecting its strong market position and ongoing innovations.

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