As analysts had previously expected, Tesla's gross profit margin in the third quarter further fell to a four-year low, boosting sales and reducing costs remains the key to Tesla's future.
On October 18th local time, Tesla's stock price fell into severe fluctuations. As of the close, Tesla was trading at $242.68, a decrease of 4.78%, and its market value evaporated overnight by $38.6 billion (approximately RMB 282.4 billion). Currently, its latest market value is $770.265 billion.
According to the latest financial report, Tesla's revenue for the third quarter was $23.35 billion, lower than Wall Street's expectations and the slowest growth rate in three years. Among them, the total revenue of the automotive business was 19.625 billion US dollars, an increase of 5% compared to the same period last year.
From a profit perspective, Tesla's net profit for the third quarter was $1.853 billion, a decrease of 44% compared to the same period last year and a significant decline compared to the previous two quarters. Tesla explained that the decline in profits was due to insufficient utilization of new factories, increased operating expenses caused by the upcoming electric pickup truck Cybertruck, and expenses for artificial intelligence and other projects.
The large-scale price cuts since the beginning of this year have dragged down Tesla's gross profit margin, with the overall gross profit margin further dropping to 17.9% in the third quarter. The latest factors affecting the gross profit margin are a decrease in delivery volume and factory equipment upgrades.
Tesla's sales in the third quarter did not increase but decreased despite price reductions, with a global delivery volume of 435100 units, a decrease of 6% compared to the second quarter. The official explanation states that the main reason for the decrease in delivery volume is the closure of production capacity due to the upgrading of key facilities.
Before the financial report was released, Tesla's gross profit margin had become a focus of attention for various institutions. Tesla, originally a measure of profitability, ranked among the top in the automotive industry, but the current declining trend has narrowed the gap.
Since 2023, Tesla's profit forgone in exchange for sales has exceeded market expectations, and its gross profit margin has been surpassed by BYD in the second quarter. In the mid-2023 report, BYD's gross profit margin reached 18.7%, while Tesla's gross profit margin for the same period was 18.2%.
Due to the decrease in delivery volume in the third quarter, the revenue growth of the automotive business was slow, and the gross profit margin of the automotive business also decreased to 16.3%, lower than analysts' expectations. But Tesla's other businesses have grown well, with its energy and related services businesses generating a total gross profit of over $500 million this quarter, twice the revenue of the second quarter.
Tesla still plans to deliver approximately 475000 new cars in the fourth quarter according to its original target of 1.8 million vehicles. After announcing the delivery volume in the third quarter, Tesla has lowered the prices of some Model 3 and Model Y models in the United States, with a maximum price reduction of $2000.
It is widely believed in the industry that Tesla relies mainly on the new Model 3 and Cyberrack, which is scheduled to be launched in the fourth quarter, to achieve its delivery goals. Cyberrack is the most important new product launched by Tesla since Model 3, which was previously believed to significantly enhance Tesla's profitability. Tesla has announced that Cyberrack will be delivered in the United States on November 30th, but the specific specifications and pricing are not yet known.
During the conference call, Tesla CEO Musk stated that Cybertruck is difficult to increase production and contributing free cash flow will take at least 18 months, with the possibility of delivering 250000 vehicles annually by 2025. Musk also revealed that 1 million people have already booked Cyberrack.
In terms of cost control, Tesla stated that its goal for the third quarter is still to reduce the average cost per vehicle, generate positive free cash flow, while maximizing delivery and continuing to invest in growth projects such as AI.
Tesla stated in its financial report that the cost of a single car in the third quarter was $37500, an increase from the $36000 reported in the 2022 annual report. Tesla stated, "Although the production costs of the new factory are still higher than those of the old factory, we have implemented necessary upgrades in the third quarter to further reduce single car costs
In terms of research and development expenses, Tesla's research and development expenses increased by 58.39% year-on-year in the third quarter, reaching $1.161 billion. At the financial report conference call, Musk stated that Tesla FSD's global testing mileage has reached 500 million miles (approximately 803 million kilometers), and the computational load of artificial intelligence training has more than doubled in the third quarter.