Tesla (TSLA) beats Q3 revenue estimates, boosted strong China sales

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Tesla (TSLA) beats Q3 revenue estimates, boosted strong China sales

 Tesla (TSLA) beats Q3 revenue estimates, boosted strong China sales
Image source: Vitaliy Karimov, Shutterstock.com

Highlights

  • Tesla Inc’s (TSLA) revenue rose to US$13.76 billion in the third quarter, beating estimates.
  • Tesla said it sold more Model 3 and Model Y cars, which are lower-priced, during the quarter.
  • In addition, Tesla’s Shanghai factory output surpassed the California plant’s production.

Tesla Inc (TSLA) on Wednesday posted a better-than-expected third-quarter revenue of US$13.76 billion, boosted by robust sales of its Model 3 and Model Y cars.

The world’s most valuable automaker has posted record revenue for the fifth consecutive quarter. Wall Street analysts had expected revenue of around US$13.63 billion, Refinitiv data showed.

In the same quarter a year ago, Tesla’s revenue was US$8.77 billion. Its gross margin, after excluding environmental credits, was 28.8%, up from 25.8% in the year-ago quarter.

The company said it sold more Model 3 and Model Y cars, which are lower-priced, during the quarter, mainly in China. It also reduced costs because of the use of more Chinese parts, including batteries. Additionally, Tesla’s Shanghai factory output surpassed the California plant’s production.

The electric carmaker, which sells its excess environmental credits to other automakers, said its revenue from sales of environmental credits were US$279 million, the lowest level in nearly two years.

Besides, Tesla’s car deliveries rose for the sixth consecutive quarter.

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Tesla Inc (TSLA) on Wednesday posted a third-quarter revenue of US$13.76 billion, boosted by robust sales of its Model 3 and Model Y cars.

Source: Pixabay

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Challenges Ahead

Tesla, led by billionaire Elon Musk, faces significant challenges in maintaining earnings growth due to the global semiconductor shortages.

Moreover, the chip crisis may pinch it more when its factories in Berlin and Texas start production. CFO Zachary Kirkhorn said it would be “quite an execution journey,” referring to these upcoming launches this year. He added that there is also some uncertainty over the cost structure due to the fluctuating prices of raw materials like nickel and aluminum.

Tesla said that it expects higher production in the fourth quarter than the previous one, although that will depend on many external factors.

The Tesla stock traded at US$865.80, up 0.18% from the previous close on Wednesday.

Tesla’s 52-week highest and lowest stock prices were US$900.40 and US$379.11, respectively.

Tesla’s current market cap is around US$867.33 billion.

Also, its P/E ratio is 450.94 and the forward P/E one year is 243.46. Tesla’s EPS is US$1.92.

Also Read: Taiwan’s Foxconn eyes EV manufacturing in India, Europe

Bottomline

The US automobile industry is witnessing robust demand for vehicles, including EVs. However, the semiconductor shortage has been proving a major spoilsport for the industry, struggling to make a comeback from the pandemic disruptions last year.

Overall, the sector remains on strong ground, with robust demand and major investments. However, investors should evaluate the companies carefully before investing in the stock market.

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