• December 3, 2022

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Key Takeaways

  • Elon Musk believes that Tesla could become a bigger company than Apple one day in terms of market cap, as he thinks people will move away from gasoline cars entirely.
  • Tesla had a net income of $3.3 billion for the most recent quarter, with record revenue of $21.45 billion.
  • There’s still plenty of uncertainty over the future of electric vehicles as concerns about a global recession grow daily.

For various reasons, Elon Musk and Tesla continue to be all over the news. Tesla reported its earnings for the third quarter of 2022, and despite another record-setting revenue period, the stock dropped as the company slightly missed analyst expectations. The revenue of $21.45 billion for the quarter was mainly attributed to the $18.69 billion raked in from automotive sales.

Even though Tesla more than doubled its net income of $1.62 billion for the same period last year, with a net income of $3.29 billion for the quarter, the company has recently faced issues with the rising cost of raw materials and challenges with ramping up production levels in Germany and Texas.

We’re going to look at the recent earnings report for Tesla to see how the company’s performing financially.

Tesla Earnings Report

Tesla announced its Q3 earnings results on October 19, 2022. Revenue for the quarter was $21.45 billion. Net income was $3.3 billion.

Here’s how the revenue breaks down for Tesla:

  • Automotive sales: $17.785 billion.
  • Automotive regulatory credits: $286 million.
  • Automotive leasing: $621 million.

Total automotive revenue was $18.69 billion for Q3, an increase of 55% year over year compared to the same quarter last year.

What are the expenses for the automotive sales revenue?

  • Automotive sales had expenses of $13.099 billion.
  • Automotive leasing had expenses of $381 million.

The automotive sector had total expenses of $13.48 billion.

The regulatory credits aren’t propping up the profits of the company any longer. The credits were about 1.5% of total automotive revenue for this quarter.

What were the other revenue streams like for Tesla for the quarter?

  • Energy generation and storage: $1.12 billion.
  • Services and other: $1.65 billion.

In this next section, we will break down these different revenue streams for Tesla.

How does Tesla make money?

Tesla has a variety of income streams, and the company isn’t just an automaker. Here’s how Tesla makes money.

Automotive sales and leasing

Tesla has seen global sales increase despite dealing with logistical bottlenecks. Tesla delivered over 343,000 EVs in the third quarter, a record number that was a year-over-year increase of more than 40%. With automotive gross margins of 27.9%, this continues to be the main revenue stream for Tesla.

Selling regulatory credits

While this is listed under the automotive section, it’s a separate revenue stream that has helped the company be profitable in the past. To reduce carbon emissions worldwide, governments have created incentives in the form of credits for automakers to develop electric vehicles. Since Tesla only produces electric cars, they get these credits for free. They can then turn around and sell these regulatory credits to other automakers who don’t meet the requirements for a 100% profit.

Energy generation and storage

This sector brought in $1.12 billion for the quarter. This division focuses on selling backup batteries for residential, commercial, and utility usage, and they also install solar rooftops. Tesla reported that energy storage increased 62% year-over-year. The company offers Powerwall home batteries and utility-scale Megapacks. This sector includes sales and leasing for energy generation and storage as the company continues to expand into energy management.

Services and other

This sector includes the fees customers pay for charging their cars at the Tesla Supercharging stations, sales of Tesla merchandise, and repairs for out-of-warranty vehicles. The company ended the quarter with 728 stores and service locations, and 4,283 Supercharger stations.

How much does Tesla earn per car?

We looked at automotive sales and delivery reports to see what the figures were for the company. Since the company doesn’t reveal the exact numbers per vehicle, we conducted our own calculations.

Tesla delivered 343,830 vehicles in the quarter, and 365,923 vehicles were produced. Since automotive sales for the quarter were at $17.785 billion, the average price of a delivered vehicle before taxes was roughly $51,726.

Since deliveries are the closest sales figure that Tesla gives, they’re our best bet in trying to find out how much the company earns per car. We should also point out that this is just a rough number as there are many other factors involved since the company produced more vehicles than it delivered for the quarter.

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What’s next for Tesla?

The controversial CEO has boldly predicted that Tesla could be worth more than Apple one day. Only time will tell if this prediction comes to fruition, but it’s worth noting that Apple is currently worth over $2 trillion based on market cap.

Many experts feel that Musk has been overpromising too much lately between this market cap statement and the humanoid robot that didn’t exactly deliver. However, we can’t deny that Tesla has become much more than an automaker as the company is now known for energy storage, artificial intelligence innovation, and even solar panels.

Here are some of the most important factors to consider regarding Tesla stock in the near future:

Recession concerns continue to impact everyone.

We can’t write about any stock without discussing the global economic concerns of a recession. As the Fed continues the most aggressive rate hike campaign in decades, there are worries that this battle against soaring inflation could tip us into a recession. Even though Musk has argued that Tesla is recession-resilient, it’s difficult to tell how consumer spending would change when it comes to vehicle purchases during a recession. There’s a major difference between recession-proof and recession-resilient, as consumers tend to focus on saving money during a recession.

Tesla believes that the world is going electric

Musk mentioned on the earnings call that he feels the world is going electric and predicted that people won’t be purchasing gasoline vehicles in the future. While it’s fair to say the world is attempting to go greener, there’s no decisive evidence indicating people are only going to purchase EVs. There are still concerns over the costs of EVs and mass adoption challenges with charging.

Tesla Semi truck

Tesla has stated that it wants to produce up to 50,000 electric trucks annually by 2024. This would increase revenue for the company as it would mean another product offering. This semi-truck is another of the major products teased along with the fully-self driving vehicles that Tesla has been hyping up for years.

Elon Musk’s Twitter controversy

While Musk’s Twitter acquisition doesn’t directly impact Tesla, there are concerns over how much Tesla stock Musk would have had to sell to make the purchase and how diluted his focus will become if he were to take on another company.

Tesla shares were down based on price reductions in China

On Monday morning, Tesla shares started to slip as news came out that the company had cut its prices of cars in China. The shares were down as much as 7% at one point as the market reacted negatively to this news. The Chinese market has faced many challenges as the country has continued to enforce strict COVID-19 policies that have impacted retail sales. Some are afraid that the country could also be tipping into a recession.

The stock closed the week at $228.52, up 11.07% for the week. In hindsight, it’s tough to argue with that performance.

How should you be investing?

While Tesla boasts that the company’s factories had a record vehicle production in the quarter, there are still logistical challenges and worries over rising material costs. Even though many feel that electric vehicles are the ride of the future, there are still plenty of risks involved with investing in Tesla or any other stock in this space. If you’re looking to invest your money, you want to know what you’re getting into.

Another way to make money from Tesla and innovations in AI is to invest in one of our AI-powered Investment Kits. Our artificial intelligence searches the markets for the best investments for all manner of risk tolerances and economic situations.

Download Q.ai today for access to AI-powered investment strategies. When you deposit $100, we’ll add an additional $100 to your account.

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