current progress 100%
Stephen Morris in San Francisco
Published2 hours ago
|Updated21:33
99Print this page
Tesla said its quarterly profit fell more than a quarter as the loss of emissions credit revenue, increased costs from US tariffs and the vast expense of its pivot to robotics and artificial intelligence ate into its margins.
Elon Musk’s electric-car maker reported its third-quarter adjusted net income fell 29 per cent year-on-year to $1.8bn, missing expectations of $1.9bn, according to a filing on Wednesday.
Revenue increased 12 per cent to $28.1bn, against average analyst estimates of $26.6bn from Visible Alpha. Its operating margin almost halved to 5.8 per cent from 10.8 per cent a year earlier.
Tesla shares dipped about 2 per cent in after-market trading.
Investors were initially optimistic that Tesla would benefit from Musk’s alliance with Donald Trump. But the consumer backlash over the chief executive’s political activism, sweeping US policy changes around EVs and the public falling out between the US president and the world’s richest man have knocked the carmaker’s fortunes.
The company said it was “difficult to measure the impacts of shifting global trade and fiscal policies” on its core business of selling cars. “Over time, we expect our hardware-related profits to be accompanied by an acceleration of AI, software and fleet-based profits,” it added.
Tesla earlier this month disclosed it delivered a record 497,099 vehicles in the three months to the end of September, up from 462,890 in the same period last year.
The sales bump was driven by customers rushing to buy electric cars ahead of the expiry of a $7,500 federal tax credit on September 30.
However, the temporary boost from those sales was more than outweighed by the impact of Trump’s global trade war, which has made sourcing essential components such as rare minerals and car exports far more expensive.
Tesla has lobbied the government against steep tariffs, warning of a hit to its profits and making it a target for retaliation.
The company also suffered a sharp decline in profit from schemes allowing Tesla to sell emissions credits to rivals that build more polluting petrol vehicles.
Income from regulatory credits trading plunged 44 per cent to $417mn in the quarter after the US government reduced fines for non-compliance on car emissions standards to zero, in effect killing the trading schemes.
Tesla made $2.8bn in profit from trading programmes last year, with about three-quarters of that coming from the US, the Financial Times has reported. Those earnings are likely to dwindle and disappear.
The company hopes the release of a refreshed edition of its flagship Model Y as well as a cheaper, stripped down version will help rejuvenate sales and help compensate for the lost credit trading revenue.
Operating expenses rose 50 per cent to $3.4bn, with Tesla spending vast sums on acquiring advanced Nvidia chips to power its ambitions in AI as Musk repositions the company towards autonomous driving, prepares to launch robotaxis and build humanoid robots.
Tesla said it has 81,000 Nvidia H100 GPUs in its Cortex data centre at its Gigafactory in Austin, Texas.
Reported net income fell to $1.4bn, below forecasts of $1.5bn.
Tesla reported growth in its energy generation and storage revenue, which surged 44 per cent to a record $3.4bn, as it deployed more commercial and retail battery packs to store cheap energy.
Services revenue — which includes its “full-self driving” assistance software and its EV Supercharger network — rose 25 per cent to $3.5bn.
Tesla is also lobbying shareholders ahead of its November 6 annual meeting, when there will be a crunch vote on a proposed $1tn share package that the board has argued is necessary to motivate and retain Musk.
Proxy advisers Institutional Shareholder Services and Glass Lewis have counselled investors to vote against the plan, which is conditional on ambitious targets.
They citied its “striking magnitude” and the lack of binding terms to ensure Musk’s commitment to Tesla as he presides over a growing number of companies from SpaceX to xAI and engages in political activism.
Musk on Sunday replied to a post criticising the size of the pay deal on his social media platform X, reiterating his threat to leave the company if it is not approved.
“Tesla is worth more than all other automotive companies combined. Which of those CEOs would you like to run Tesla? It won’t be me.” |
