Tesla performance in third quarter surpasses expectations

Tesla's third-quarter earnings showed better than expected results at a revenue of nearly $8.8 billion and net income of $331 million. The shares have so far gone up by 405%.



Tesla, Elon Musk’s electric car making company reported the fifth quarter of profits, despite dire warnings of a paper tiger by analysts and said that the company is on point with its deliveries of 500,000 cars.

Tesla’s performance against analysts’ expectations:

  • Earnings per share (adjusted):76 cents vs 57 cents, per Refinitiv
  • Revenue:$8.77 billion vs $8.36 billion, per Refinitiv
  • Net income (GAAP):$331 million vs $394 million, per Refinitiv

The company has delivered 139,300 vehicles this quarter.

Tesla’s factory expansion in Austin, Texas and Brandenburg in Germany pushed expenses by 33% from last quarter to $1.25 billion.

Musk, talking about the production facilities during the earnings call, said, “I should make a point that for Berlin and Austin, we do expect to start delivering cars from those factories next year but because of the exponential nature of the spool up of manufacturing plants especially one with new technology, we’ll start off very slow at first and then become very large.”

Tesla earnings Q3 quarterly report

Tesla previously planned to start production at the Berlin factory in July 2021. But Musk cautioned that it will take another two years to hit full capacity.

Cybertruck delivery was pegged at the end of 2021 “if things go well.”

CFO Zachary Kirkhorn said on Wednesday’s call that Tesla now aims for 500,000 deliveries in 2020, reiterating the company’s earlier guidance during the Battery Day presentation.

 “While achieving this goal has become more difficult, delivering half a million vehicles in 2020 remains our target,” the company said. This will largely depend on increased production at its Shanghai factory and higher output of its Model Y, it said. Tesla must deliver 180,000 cars in the fourth quarter to meet the 500,000 goal.

Kirkhorn acknowledged that Tesla’s third-quarter results were helped by better-than-expected regulatory credit sales. “The regulatory credits business was stronger than our expectations and we are tracking to more than double this year compared to last,” he said. Tesla made $397 million in regulatory credits during the quarter, double the amount it made from these “green” credits year-over-year.

Kirkhorn said that Tesla plans to spend $2.5 billion more in the coming two years on new factories and expansion.

Tesla has managed to raise nearly $7 billion in the past months with its five-for-one stock split and the sale of $5 billion of its common stock in September.

“What jumped out to me is gross margins,” said Gene Munster, managing partner at Loup Ventures. “That’s the machine that keeps the machine growing. They are making more money from each car.”

Tesla’s gross margins went up by more than 250 basis points in the quarter to 23.5%, while operating margins grew to 9.2%.

The strong profits is likely to speed up the company’s inclusion in the S&P Dow Jones Indices. Garrett Nelson, an analyst at CFRA Research, said in a note to clients, “We think TSLA’s fifth straight quarter of GAAP profitability raises the likelihood of the stock being added to the S&P 500 in the near term.”

Anna Domanska
Anna Domanska is an Industry Leaders Magazine author possessing wide-range of knowledge for Business News. She is an avid reader and writer of Business and CEO Magazines and a rigorous follower of Business Leaders.

Recent Posts

Moderna vaccine more effective than Pfizer, study says

Moderna vaccine more effective than Pfizer, study says

Moderna’s Covid-19 vaccine does a slightly better job of preventing coronavirus-related hospitalizations and emergency department visits.
1 day ago
iPhone 13 and iPhone 13 Pro: Specifications, Release Date, Features and much more

iPhone 13 and iPhone 13 Pro: Specifications, Release Date, Features and much more

Apple iPhone 13 Pro and iPhone 13 Pro Max can be a hit with its ever new technology A15 Bionic chip and other cool profound features.
3 days ago
Total signs $27 billion energy deal to fund 1-gigawatt solar power plant

Total signs $27 billion energy deal to fund 1-gigawatt solar power plant

The French oil major, Total, has signed a $27 billion deal to fund a 1-gigawatt solar power plant, and boost oil and gas production in the Middle-East region.
3 days ago
PMI seals $1.51 billion takeover of British inhalation specialist Vectura

PMI seals $1.51 billion takeover of British inhalation specialist Vectura

Philip Morris International (PMI) acquires a 22.6% stake in British inhalation specialist Vecutra closing in on the controversial $1.51 billion takeover.
4 days ago
Apple co-founder Steve Wozniak joins the space race

Apple co-founder Steve Wozniak joins the space race

Wozniak, popularly known as “Woz”, is setting up a private space company with Ripcord co-founder Alex Fielding. In a tweet, Wozniak shared a promotional video for the company c
5 days ago
Auto chip shortage affects its production; factory closures rise

Auto chip shortage affects its production; factory closures rise

Automakers like Peugot, Ford, and Toyota are on the run to regain high-margins from the auto chip making since the pandemic and weather disasters have taken over.
5 days ago