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Tesla ’s decision to repeatedly slash EV prices put pressure on margins , causing net to fall 44 % to $ 1.85 billion in the third quarter from the same year - agone flow , the party report Wednesday .
Teslareportedrevenue of $ 23.35 billion in the third poop , which gained 9 % year - over - year thanks to higher fomite deliveries and increase in other portion of its business . Analysts poll by Yahoo Finance calculate revenue of $ 24.1 billion .
While an increase in sales is positive , the company ’s continued price cuts have pressure margins — atrend that has continuedfor the past several quarters . Tesla report a consummate margin of 17.9 % in the third quarter , falling from 25.1 % in the same menstruation last year . It ’s also down from Q2 when it reported gross profit of 18.2 % .
The auto maker missed Wall Street estimates on tax revenue and net income . stockholder seemed to have braced for Tesla ’s Q3 earnings earlier in the day , with ploughshare closing down 4.78 % to $ 242.68 . Shares have risen in after - hour trading by 1.5 % .
Tesla closed the third quarter with a devoid cash flowing of $ 800 million , down from $ 1 billion last quarter .
Price cuts and costs
Tesla attributed its fallen profitability margin largely to itsreduced pricing of vehicles. In the third quarter, Tesla cut prices for its Model S and Model X luxury vehicles by as much as $18,500 per car. Price cuts for the more popular and affordable Model 3 and Model Y continued into October.
Tesla also pointed to increasing operating expenses drive by Cybertruck , AI and other R&D undertaking that the society did not furnish further details on . The cost of stagnate its Fremont , California , manufacturing plant for upgrades and ramping production also chipped away at its net income . Tesla also cited foreign interchange impact as a minus factor .
On the upper side , the ship’s company pointed to growth in vehicle obstetrical delivery , reduced toll per vehicle and the $ 7,500 Inflation Reduction Act reference benefit , arrant profit maturation in itsenergy storage businessand growth in regulative credits . Tesla brought in $ 554 million in zero emission taxation quotation in the third quarter , nearly double the amount it have in the same period last year .
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Outlook
Tesla has n’t changed its outlook for the twelvemonth , saying it still plan to deliver 1.8 million vehicles by the end of 2023 .
In Q3 , Tesla delivered 435,059 vehicle , which wasnearly 7 % lowerthan deliveries in Q2 . That was expected , though , due to a planned mill closure .
If Tesla wants to make it to its 2023 sale goal , it ’ll have to fill a 480,000 fomite gap . The Cybertruck would likely replete that void . But with the delivery event now scheduled for November 30 , few are expected to be delivered by the end of the year .
That means price cut may be the go - to strategy for the 4th quarter . That ’s specially true if we zoom out and expect at China sales event , which has shown some softening . need for Tesla vehicle in China , which has historically been a top market place for the carmaker , is wan as local EV companies like BYD gobble up market portion .
“ Pricing is a primal factor that could help Tesla make up for a potential demand drop and boost revenue , ” say Jesse Cohen , aged psychoanalyst at Investing.com . “ As such , I would not be surprised if Tesla search further price hikes in the weeks in advance as difficulty starts to brew at some of its rival , include Lucid Motors and Rivian . ”
“ The big query is if this is just a blip , or signs of a magnanimous shift among consumer as rising sake rates and a weaker economic backdrop discourage consumers from score heavy - slate purchases , ” continued Cohen .
