Tesla reported a 44 per cent drop in its third-quarter net income driven by a dip in vehicle deliveries as the company’s production was affected due to “planned downtime” at its factories.
The EV giant posted a net profit of more than $1.8 billion during the July-September period, marking Tesla's 17th straight profitable quarter.
But this is the first time in the past eight quarters that the company has reported less than $2 billion in profit.
Shares of the company dropped 4.8 per cent at the close of trading to $242.68 on Wednesday, giving it a market value of $760.43 billion.
The company's shares, which dropped another nearly 4 per cent in after hours trading, are up about 124.5 per cent since the start of the year.
The Texas-based company delivered 435,059 vehicles in the July-September period, down 6.7 per cent, missing analysts’ estimates of 461,640 vehicles.
Meanwhile, vehicle production dipped 10.3 per cent quarterly to 430,488 units in three months to September 30.
However, Tesla’s billionaire chief executive Elon Musk and other company executives indicated in July that vehicle production would slow down during the third quarter due to shutdowns for factory improvements.
Total revenue during the quarter jumped 9 per cent to more than $23.3 billion, missing analysts’ expectations of $24.1 billion. It was 6.3 per cent down on a quarterly basis.
It was the first time Tesla has missed on revenue guidance since the second quarter of 2019, and the fifth time in a row the company reported $20 billion or more in sales.
“It is going to require immense work to reach volume production and be cash-flow positive at a price that people can afford,” Mr Musk said during the earnings call.
“I just want to temper expectations for cyber truck. It’s a great product but financially it will take a year to 18 months before it is a significant positive cash-flow contributor.”
The company's operating income decreased by 52 per cent yearly to almost $1.7 billion while operating expenses surged 43 per cent to $2.4 billion in the third quarter.
The company said its operating income dipped mainly because of idle cost related to factory upgrades, reduced average selling price of vehicles, and increase in expenses driven by the coming cyber truck and other large research and development projects related to artificial intelligence.
Currently, Tesla produces its vehicles in Fremont, California; Austin, Texas; Shanghai, China; and Berlin, Germany.
The company said it remained on track to begin production of its cyber trucks later this year at its gigafactory in Texas.
In the first week of October, Tesla revealed another round of price cuts for its vehicles in the US in a bid to attract more customers.
It was the seventh time this year that the world's biggest electric car maker has made such a move.
“Tesla delivered an underwhelming quarter,” Jesse Cohen, senior analyst at Investing.com, told The National.
"I don't think the price cuts are over, mainly for the reason that demand is still weak … pricing is a key factor that could help Tesla make up for a possible demand drop and boost revenue.
“The big question is if this is just a blip, or signs of a bigger shift among consumers as rising interest rates and a weaker economic backdrop discourage consumers from making big-ticket purchases.”
Tesla, which went public in 2010, said its cash, cash equivalents and investments “increased sequentially by $3 billion to $26.1 billion” in the third quarter.
It was driven mainly by a free cash flow of $800 million and financing activities of $2.3 billion.
Tesla wrote in its letter to stakeholders: “Our cost of goods sold per vehicle decreased to ~$37,500 in third quarter.
"While production cost at our new factories remained higher than our established factories, we have implemented necessary upgrades in the third quarter to enable further unit cost reductions.”
In the previous quarter in its energy segment, Tesla’s solar deployments declined to 45 megawatts. This was due to “sustained high interest rates and the end of net metering in California”, the company said.
Meanwhile, the energy storage deployments increased by 90 per cent year-on-year in the last quarter to 4 gigawatt hours, the company’s highest quarterly deployment ever.
For 2023, Tesla aims to produce about 1.8 million cars.
“We are planning to grow production as quickly as possible in alignment with the 50 per cent CAGR [compound annual growth rate] target we began guiding to in early 2021," the company said.
UK-EU trade at a glance
EU fishing vessels guaranteed access to UK waters for 12 years
Co-operation on security initiatives and procurement of defence products
Youth experience scheme to work, study or volunteer in UK and EU countries
Smoother border management with use of e-gates
Cutting red tape on import and export of food
Farasan Boat: 128km Away from Anchorage
Director: Mowaffaq Alobaid
Stars: Abdulaziz Almadhi, Mohammed Al Akkasi, Ali Al Suhaibani
Rating: 4/5
Diriyah%20project%20at%20a%20glance
%3Cp%3E-%20Diriyah%E2%80%99s%201.9km%20King%20Salman%20Boulevard%2C%20a%20Parisian%20Champs-Elysees-inspired%20avenue%2C%20is%20scheduled%20for%20completion%20in%202028%0D%3Cbr%3E-%20The%20Royal%20Diriyah%20Opera%20House%20is%20expected%20to%20be%20completed%20in%20four%20years%0D%3Cbr%3E-%20Diriyah%E2%80%99s%20first%20of%2042%20hotels%2C%20the%20Bab%20Samhan%20hotel%2C%20will%20open%20in%20the%20first%20quarter%20of%202024%0D%3Cbr%3E-%20On%20completion%20in%202030%2C%20the%20Diriyah%20project%20is%20forecast%20to%20accommodate%20more%20than%20100%2C000%20people%0D%3Cbr%3E-%20The%20%2463.2%20billion%20Diriyah%20project%20will%20contribute%20%247.2%20billion%20to%20the%20kingdom%E2%80%99s%20GDP%0D%3Cbr%3E-%20It%20will%20create%20more%20than%20178%2C000%20jobs%20and%20aims%20to%20attract%20more%20than%2050%20million%20visits%20a%20year%0D%3Cbr%3E-%20About%202%2C000%20people%20work%20for%20the%20Diriyah%20Company%2C%20with%20more%20than%2086%20per%20cent%20being%20Saudi%20citizens%0D%3C%2Fp%3E%0A
Tips to stay safe during hot weather
- Stay hydrated: Drink plenty of fluids, especially water. Avoid alcohol and caffeine, which can increase dehydration.
- Seek cool environments: Use air conditioning, fans, or visit community spaces with climate control.
- Limit outdoor activities: Avoid strenuous activity during peak heat. If outside, seek shade and wear a wide-brimmed hat.
- Dress appropriately: Wear lightweight, loose and light-coloured clothing to facilitate heat loss.
- Check on vulnerable people: Regularly check in on elderly neighbours, young children and those with health conditions.
- Home adaptations: Use blinds or curtains to block sunlight, avoid using ovens or stoves, and ventilate living spaces during cooler hours.
- Recognise heat illness: Learn the signs of heat exhaustion and heat stroke (dizziness, confusion, rapid pulse, nausea), and seek medical attention if symptoms occur.
Jetour T1 specs
Engine: 2-litre turbocharged
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Killing of Qassem Suleimani
Dust and sand storms compared
Sand storm
- Particle size: Larger, heavier sand grains
- Visibility: Often dramatic with thick "walls" of sand
- Duration: Short-lived, typically localised
- Travel distance: Limited
- Source: Open desert areas with strong winds
Dust storm
- Particle size: Much finer, lightweight particles
- Visibility: Hazy skies but less intense
- Duration: Can linger for days
- Travel distance: Long-range, up to thousands of kilometres
- Source: Can be carried from distant regions
Killing of Qassem Suleimani
UAE tour of the Netherlands
UAE squad: Rohan Mustafa (captain), Shaiman Anwar, Ghulam Shabber, Mohammed Qasim, Rameez Shahzad, Mohammed Usman, Adnan Mufti, Chirag Suri, Ahmed Raza, Imran Haider, Mohammed Naveed, Amjad Javed, Zahoor Khan, Qadeer Ahmed
Fixtures: Monday, first 50-over match; Wednesday, second 50-over match; Thursday, third 50-over match
Conflict, drought, famine
Estimates of the number of deaths caused by the famine range from 400,000 to 1 million, according to a document prepared for the UK House of Lords in 2024.
It has been claimed that the policies of the Ethiopian government, which took control after deposing Emperor Haile Selassie in a military-led revolution in 1974, contributed to the scale of the famine.
Dr Miriam Bradley, senior lecturer in humanitarian studies at the University of Manchester, has argued that, by the early 1980s, “several government policies combined to cause, rather than prevent, a famine which lasted from 1983 to 1985. Mengistu’s government imposed Stalinist-model agricultural policies involving forced collectivisation and villagisation [relocation of communities into planned villages].
The West became aware of the catastrophe through a series of BBC News reports by journalist Michael Buerk in October 1984 describing a “biblical famine” and containing graphic images of thousands of people, including children, facing starvation.
Band Aid
Bob Geldof, singer with the Irish rock group The Boomtown Rats, formed Band Aid in response to the horrific images shown in the news broadcasts.
With Midge Ure of the band Ultravox, he wrote the hit charity single Do They Know it’s Christmas in December 1984, featuring a string of high-profile musicians.
Following the single’s success, the idea to stage a rock concert evolved.
Live Aid was a series of simultaneous concerts that took place at Wembley Stadium in London, John F Kennedy Stadium in Philadelphia, the US, and at various other venues across the world.
The combined event was broadcast to an estimated worldwide audience of 1.5 billion.
