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Tesla TSLA Outcomes Q3 2021

Tesla reported third-quarter earnings after the bell on Wednesday, and it’s a blow on both earnings and earnings.

The company’s stock fell 1.5% after the close of business. Here are the results.

  • Earnings per share (adjusted): $ 1.86 versus $ 1.59 per refinitive
  • Revenue: $ 13.76 billion versus $ 13.63 billion per refinitive

The company reported net income of $ 1.62 billion (GAAP) for the quarter, exceeding $ 1 billion for the second time. For the year-ago quarter net income was $ 331 million.

The record results were driven by improved gross margins of 30.5% in the automotive business and 26.6% overall, both records for at least the past five quarters.

Auto sales rose to $ 12.06 billion and auto sales cost for the quarter was $ 8.38 billion.

Tesla also posted revenue of 806 million in previous financial filings.

In the energy and storage businesses, the cost of sales rose to the highest level in the last five quarters of $ 803 million in the third quarter.

In a shareholder deck Tesla released ahead of a call to discuss third quarter results, the company said, “A variety of challenges, including semiconductor shortages, port congestion, and rolling power outages, have hampered our ability to keep factories running at full speed.”

Despite these problems, the company reiterated its previous forecast that it expects “an average annual growth in vehicle deliveries of 50%” over a period of several years.

In the third quarter, Tesla recorded an impairment loss of $ 51 million related to its investment in Bitcoin, which was reported under “Restructuring and other” charges.

Tesla had previously announced the delivery of 241,300 electric vehicles and the production of 237,823 vehicles in the period ended September 30, 2021.

Unlike other automakers, Tesla’s sales rose in the quarter and set a new company record, despite chip shortages and supply chain challenges that weigh on the industry. (Deliveries are the closest approximation of Tesla reported sales.)

Many other automakers have reported record profits during the semiconductor die shortage due to robust consumer demand, but have not seen better sales due to supplier restrictions.

In a shareholder deck for the third quarter of 2021, Tesla remained non-binding regarding the start date for production of the highly anticipated cybertruck. The company is just saying that production of the nontraditional truck will begin sometime after the Model Y starts production in Austin, where Tesla is building a new vehicle assembly plant.

Tesla also said on deck that it will “switch to lithium iron phosphate (LFP) battery chemistry” for all of its standard range vehicles worldwide.

Previously, Tesla used lithium-ion battery cells with nickel cathodes in its standard vehicles for customers in North America. Because iron is more abundant than raw materials used in other lithium-ion battery cells, such as nickel and cobalt, LFP batteries are generally cheaper to manufacture.

The two leading manufacturers of this type of battery cell in China are CATL and BYD. Tesla is already sourcing batteries from CATL, the companies previously announced.

Analysts asked Tesla executives on Wednesday if they plan to source all of their LFP batteries from China. Tesla’s senior vice president of powertrain and energy engineering, Drew Baglino, said the company’s goal is to “localize” production of cars and batteries as much as possible to the continents where it makes cars. That goal extends to battery cells as well, he suggested.

Shareholders also asked Tesla how the company would deal with a stricter or more critical federal vehicle safety regulator.

The National Highway Traffic and Safety Administration is currently investigating Tesla for potential safety flaws in its autopilot driver assistance system following a series of accidents in which Tesla drivers collided with parked first aid vehicles while using the autopilot.

Tesla’s vice president of automotive technology, Lars Moravy, spoke of Tesla’s relationship with NHTSA as a partnership on Wednesday’s call. “We always cooperate fully with NHTSA,” said Moravy. As the NHTSA figured out the rules and regulations for vehicles with more software-enabled features, he added, “We’re excited to be part of this journey.”

The comments contrasted with statements made by Tesla CEO Elon Musk. Musk previously accused the Biden government of generally anti-Tesla bias.

And this week, Musk complained about a new NHTSA safety advisor, Missy Cummings, to his tens of millions of followers on Twitter.

Cummings, a professor of engineering and computer science at Duke University, previously criticized Tesla’s approach with the driver assistance systems, which it markets as autopilot and full self-driving options. None of the systems make Tesla vehicles autonomous or safe for use without a driver at the wheel.

“Objectively, their track record against Tesla is extremely biased,” Musk wrote.

US Secretary of Transportation Pete Buttigieg said at a press conference on Wednesday, “He’s welcome to call me if he’s concerned.”

Last quarter, Musk said he would no longer hold profit talks by default.

The bombastic CEO decided not to reach out to shareholders and analysts on Wednesday, and the earnings call was relatively dry compared to previous quarterly calls when Musk famously insulted analysts or labeled pandemic-related health care contracts as fascist.

Correction: Due to a processing error, an earlier version of this article incorrectly reported the components of Tesla’s service revenue. FSD subscriptions are counted as part of automotive sales.

– CNBC’s Michael Wayland contributed to the coverage.

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