Tesla is experiencing substantial growth in its profits.
Tesla saw a substantial rise in earnings during Q3, primarily due to lowered manufacturing expenses: The American electric vehicle giant reported a Q3 profit of around $2 billion ($2.18 billion) for July to September, marking a 17% increase compared to the same period in 2021, as disclosed by Tesla on Wednesday. Revenue also climbed by 8% to hit $25.2 billion.
During the initial two quarters, profits had taken a hit - Tesla implemented price reductions and downtsized its workforce. However, the situation began to change in Q3 with decreased material and shipping expenses, as detailed by Tesla on Wednesday.
As per auto analyst Ferdinand Dudenhoeffer, Tesla managed to boost its profit ratio in both Q2 and Q3. The Q3 operating margin, which represents profit before taxes and interest as a percentage of revenue, came in at 10.8%. Analysts had anticipated a margin of 10%. Dudenhoeffer expressed surprise at the 10.8% figure, noting that profit margins had actually declined somewhat at BMW, Mercedes, and Volkswagen during Q2.
In a Wednesday announcement, Tesla unveiled plans to introduce "more affordable electric vehicles for all" in its efforts to keep up the momentum towards renewable energy adoption. Production of the electric semi-truck is scheduled to commence by the end of 2025. During a conference call, CEO Elon Musk remarked, "The demand is insane."**
Looking ahead to 2024, Tesla anticipates a minor increase in sales for the year. Musk predicts a sales boost of 20 to 30% in 2023, causing the Tesla stock price to surge by nearly 12% in after-hours trading.
Tesla's Q3 profit of $2.18 billion was a significant improvement from previous quarters, largely due to reduced manufacturing expenses. With the Q3 profit margin of 10.8%, Tesla outperformed analyst expectations and even surpassed the profit ratios of competing automakers like BMW and Mercedes.
