Tesla's Record Revenue and Profit Sound Less Fun Without Musk

After the bell on Wednesday, Tesla Inc TSLA topped both top and bottom-line expectations. The record third-quarter results were driven by improved gross margins of 30.5% on its automotive business and 26.6% overall, both of which are records for at least the last five quarters.

Musk Was Missed

Last quarter, Tesla's flamboyant CEO said he will no longer be leading earnings call. Musk chose not to address shareholders and analysts on Wednesday, resulting in a relatively dry atmosphere compared to prior quarterly calls when Musk insulted analysts, or called pandemic-related health restrictions fascist.

Third-Quarter Figures

For the quarter, GAAP net income surpassed $1 billion for the second time as it amounted to $1.62 billion. Only one year ago, it was merely $331 million. Adjusted earnings per share amounted to $1.86 vs $1.59 expected per Refinitiv.

Deliveries are the closest approximation of Tesla's reported sales with 241,300 electric vehicles delivered and 237,823 vehicles produced during the period that ended on September 30^th, 2021. Revenue amounted to $13.76 billion, exceeding the expectation of $13.63 billion. Automotive revenue rose to $12.06 billion whereas costs amounted to $8.38 billion. Energy business brought in $806 million whereas services and other revenue brought in $894 million.

As for bitcoin, Tesla recorded a $51 million impairment charge related to its investment which was reported under "restructuring and other" expenses.

There are a few automakers who have reported record profits but they owe it to resilient consumer demand. However, they have not been able to grow sales due to supply constraints. Unlike other automakers whose sales suffered due to chip shortages and supply chain disruptions, Tesla's sales did not only rise during the quarter but also set a new company record.

Could Tesla Be Run Over?

On October 11^th, U.S.-listed start-up Xpeng Inc XPEV revealed it has produced 100,000 cars, achieving this milestone only six years since its inception. Its EV rival, the start-up Nio Inc NIO reached the same production milestone back in April. Chinese electric battery and vehicle maker BYD Company Limited BYDDF said in May it produced 1 million electric passenger cars which include battery-only and hybrid-powered cars. As a comparison, Tesla took 12 years to reach this production milestone due to numerous production delays, especially in its early years.

In a nutshell, China's electric car companies are racing to ramp up production and they are doing it faster than Tesla did during its early years. To be clear, Tesla is still much larger as it crossed the 1 million car mark in March 2020.

What About the Cybertruck?

The EV leader remained non-committal on the production start date of its highly anticipated non-traditional electric pickup, only saying that it is scheduled to begin at some point after Model Y production commences in the new facility in Austin. Meanwhile, Rivian has raised the bar on this front with the R1T already on the road. Many other electric pickups are scheduled to hit the roads next year, such as adventurous Atlis XT and the luxurious Hercules Alpha, which will both be equipped with Worksport Ltd WKSP revolutionary TerraVis solar technology. Meanwhile, Tesla announced it will be "shifting to Lithium Iron Phosphate (LFP) battery chemistry globally for all of its standard range vehicles.

No One is Immune to the Chip Shortage

A variety of challenges that include semiconductor shortages, congestion at ports, and rolling blackouts, have been hampering Tesla's ability to keep factories running at full speed. The president of Hisense, one of China's largest TV and household goods makers, told CNBC that the global chip shortage could persist for another two to three years. But even with those bumps in the road, Tesla still expects to "achieve 50% average annual growth in deliveries" over a multi-year horizon as it confirmed its prior guidance.

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