Tesla Sees 37% Earnings Slump in Q3 Despite Revenue Rise; Elon Musk Forecasts Cybertruck Impact

Tesla reported a 37% drop in third-quarter earnings, with CEO Elon Musk experiencing the lowest income in two years. The quarterly revenue, however, saw a 9% increase, reaching $23.35 billion.

Despite the positive revenue growth, Tesla's gross profit margin declined to 17.9%, a decrease of 719 basis points from the previous quarter.

Analysts' Predictions Versus Tesla's Actual Performance

Wall Street analysts had predicted a 30% decrease in Tesla's earnings per share (EPS) to 73 cents while expecting the revenue to increase by 13% to $24.18 billion, according to Investors. Additionally, concerns were raised over Tesla's profit margins remaining below the expected threshold due to potential surprise price cuts in the final months 2023.

Tesla announced increased operating expenses driven by projects such as the Cybertruck and various artificial intelligence initiatives. The company mentioned that the Cybertruck is currently in pilot production and confirmed that initial deliveries are scheduled for Nov. 30.

However, during the Q3 earnings call, Elon Musk issued a cautionary statement regarding Cybertruck's impact on cash flow, forecasting it to become a significant contributor only after a year to 18 months, as per Yahoo.

Tesla Faces Challenges with Cybertruck Production and Third-Quarter Vehicle Deliveries

Musk expressed concerns about the challenges involved in achieving volume production of the Cybertruck, estimating an output of approximately 250,000 units per year by 2025. As Tesla's first new passenger vehicle since the launch of the Model Y in 2020, the Cybertruck's pricing and key specifications, which significantly impact demand and profitability, have yet to be disclosed.

The global EV giant affirmed its progress on the next-generation platform while providing minimal details. Tesla also hinted at an upcoming vehicle silhouette during its annual shareholder meeting. Musk confirmed plans to commence construction at its Mexico plant, although with certain conditions and challenges.

"We want to get a sense for what the global economy is like before we go full tilt on the Mexico factory," Musk said. "If interest rates start coming down, we will accelerate," he added.

In early October, Tesla revealed that it delivered 435,059 vehicles during the third quarter, falling short of expectations and reflecting a 6% decrease compared to the previous quarter. Responding to the delivery miss, Tesla reduced the prices of certain models, including a $1,250 cut for the U.S. Model 3 RWD and a $2,000 reduction for the Model Y Long Range.

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