Tesla’s Q3 results fell short of analyst expectations, with the company facing increased costs and the impact of price discounts. The electric vehicle giant, based in Texas, reported sales of $23.35 billion for the July to September period, below the $24.19 billion predicted by analysts surveyed by Factset. Net profits also came in lower than expected, at 66 cents per share, compared to the forecasted 73 cents.
Elon Musk has implemented several price reductions throughout 2023, emphasizing higher sales over larger profit margins. These price cuts, some of which reduced prices by a third, were made as legacy automakers like General Motors and Ford introduced more electric vehicles to the market. Unlike its rivals, Tesla avoided disruptions caused by a major strike in the United States.
However, these price cuts have made investors uneasy, resulting in Tesla‘s share price falling over seven percent in the past month. Despite this, Tesla’s stock valuation remains considerably higher than that of other US automakers, having more than doubled in 2023. Elon Musk’s status as one of the world’s wealthiest individuals remains unshaken.
Furthermore, Tesla reported a decrease in new vehicle deliveries for the third quarter, citing downtime at its Shanghai and Austin factories. Overall production declined by 10 percent from the second quarter, with a total of 430,488 units. Nevertheless, Tesla reaffirmed its full-year target of producing 1.8 million vehicles.
The company also confirmed its plan to release the new Cybertruck, an innovative response to the American pickup truck, by the end of the year.
The company emphasized the importance of investing in AI and software to advance autonomous driving, with Musk stating during an earnings call in July that autonomy would render current performance figures insignificant.
While the electric vehicle market has experienced undeniable growth, recent indications suggest that the expansion might be slowing. General Motors, for instance, announced a delay in converting a plant for electric vehicle (EV) truck production, citing shifts in demand as a contributing factor. Additionally, higher interest rates have put a damper on new car purchases, following more than a decade of remarkably low interest rates that incentivized customers to upgrade to the latest models.
Elon Musk, known for his role in creating SpaceX and Tesla, has faced challenges in his management of X, previously Twitter, which he acquired for $44 billion a year ago. The platform, now renamed X, has experienced a decline in advertising spending and is increasingly perceived as a platform for unmoderated speech and conspiracy theories.