Tesla Stocks Q3 Earnings revealed an adjusted EPS of $0.72 instead of $0.60 expected revenue. A $2.17 Billion Q3 profit, a 17.3% higher than last year.
Tesla Stocks in its third quarter report surprised everyone by posting a 17.3% higher profit than last year. Tesla stocks yielded $2.17 Billion in profits to the company. This profit exceeded Q3’s $1.85 Billion revenue and was primarily attributed to increased EV sales. The increased Tesla electric vehicle sales were due to ongoing price reductions coupled with lower-interest financing options for older Tesla models.
Tesla Stocks: Key Financial Highlights
Tesla EV revenue in Q3 was $25.18 Billion, slightly below analysts’ $25.47 Billion target. This revenue figure is a 7.8% year-over-year increase. The gross margin in Q3 also improved significantly from an expected 16.8% to 19.8%.
Furthermore, Tesla Stocks earnings per share (EPS) increased from an expected $0.60 to $0.72.
This was possible due to Tesla delivering 462,890 vehicles in the third financial quarter. This was a 6.4% increase in deliveries as compared to the same period last year.
Tesla Market Reaction
Tesla Automobiles shares after the Q3 announcement surged nearly 9% in after-hours trading. This indicates strong investor confidence in Tesla’s quarterly performance and hopes for a better future.
This is just the beginning of the good news for Tesla Stocks. The EV company expects a little more slight growth in car delivery this year. It also has plans to launch more affordable EVs this year. CEO Elon Musk hinted at an affordable Tesla EV of around $25,000 later this year.
Tesla Stocks Improved Margin Factors
Tesla’s improved Q3 earnings can be attributed to primarily three factors. Scale economy, Cost Reductions, Vertical Integration, Product Mix Sales, and Non-Vechicle Revenue sources. Let’s understand these in brief.
Scale Economics
Tesla increased its product volume significantly since last year. The company ramped up vehicle production reducing the manufacturing fixed costs significantly. The Shanghai plant of Tesla lowered the EV manufacturing costs to a great extent in addition to increasing EV output.
Cost Reduction
Tesla’s cost per unit was drastically reduced by a huge margin, a flat 12%. The cost per unit came down from around $40,000 to around $35,200 this quarter. Tesla also managed to reduce production costs by sourcing cheaper raw materials and increasing production efficiencies.
Vertical Integration
Tesla also inculcated vertical integration of its supply chain to reduce costs. The EV company has reduced its dependency on external suppliers for battery production, and software development. This reduced overlapping costs significantly.
Product Mix Sales Growth
Tesla introduced numerous affordable models in recent times. These include cars such as Model 3 and Model Y, EV cars in a lower price range which became an instant hit with customers boosting the Tesla cars sales tremendously. This increased overall profitability contributed greatly to surging Tesla Shares in the Q4 quarter.
Non Vehicle Revenue Sources
Tesla Shares grew in value also due to diversified revenue streams of the company from non-vehicles. The EV company made profits from charging services, battery storage systems, and selling regulatory credits to other automakers. These resulted in Tesla’s higher gross margins pumping the company’s overall profitability.
Tesla Stocks: Takeaways
Tesla shares are one of the best investment options available to investors out there. The $2.17 Billion in profits in Q3 will make it an irresistible option for stock market enthusiasts and investors alike. This along with Tesla holding Bitcoins en-masse is keeping the company amongst the most lucrative stock options for the common people as well as institutional investors.
With a phenomenal Q3 profit for Tesla Shareholders, Tesla is on the path to create financial wonders for it investors in the long run!
Also Read: How Many Shares of Tesla are there?