Tesla warns factory openings won’t be easy, posts record profits

Oct. 20 (Reuters) – Tesla Inc (TSLA.O) on Wednesday said its upcoming factories and headwinds in its supply chain would put pressure on its margins after beating Wall Street expectations for third quarter revenue thanks to record deliveries.

The world’s most valuable automaker weathered the pandemic and global supply chain crisis better than its competitors, posting record revenues for the fifth consecutive quarter from July to September, fueled by increased production in its Chinese factory.

Led by billionaire Elon Musk, Tesla faces challenges to maintain profit growth amid a prolonged chip shortage and with its factories starting production in Berlin and Texas this year.

“There is a whole execution journey ahead of us,” said CFO Zachary Kirkhorn, referring to his plans to start production at new factories in Germany and Texas.

“There are a number of unknown unknowns that we need to work on,” he added. “We are sort of also in this uncertain environment when it comes to the cost structure,” he said, referring to fluctuations in the prices of raw materials such as nickel and aluminum.

Musk himself was not present at the quarterly earnings call for the first time. Read more

Tesla said it aimed to increase production in the fourth quarter from the previous quarter, adding that “the extent of growth will be largely determined by external factors.”

Tesla shares, up about 23% this year, fell about 0.6% in extended trading on Wednesday night.

Third-quarter revenue reached $ 13.76 billion from $ 8.77 billion a year earlier. Analysts had expected revenue of around $ 13.63 billion, according to IBES data from Refinitiv.

Tesla’s automotive gross margin, excluding environmental credits, rose to 28.8%, from 25.8% in the previous quarter.

Tesla’s overall average price fell as it sold more cheaper Model 3 and Model Y cars, but occasionally raised prices in the United States.

“The average selling price (AVP) of Tesla vehicles was higher than expected and the US market pushed it,” said Gene Munster, managing partner of venture capital firm Loup Ventures, an investor in Tesla.

Tesla cut costs by using more Chinese parts, including batteries. The company saw strong sales in China, where its Shanghai plant overtook the Tesla plant in Fremont, Calif., In terms of production.

“We believe this reflects the mix as well, with its lower-cost plant in China representing a higher percentage of overall production and the Fremont, Calif., Plant representing a declining share,” said Garrett Nelson, senior analyst. shares at CFRA Research.

In the third quarter, Tesla reported $ 279 million in revenue from the sale of environmental credits, the lowest level in nearly two years. The electric car maker sells its excess environmental credits to other automakers trying to comply with regulations in California and elsewhere.

Reporting by Hyunjoo Jin in San Francisco and Subrat Patnaik in Bengaluru Editing by Maju Samuel, Peter Henderson and Matthew Lewis

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