Executive Summary
In Q3 2023, Tesla Inc (TSLA) reported a revenue of $23.35 billion, reflecting an 8.84% increase year-over-year but a 6.33% decrease quarter-over-quarter, highlighting pressures from economic uncertainty and declining vehicle prices. Net income of $1.85 billion represents a sharp decline of 43.71% YoY, marking significant challenges in maintaining profitability-driven margins. Management emphasized the ongoing transition toward sustainable production while acknowledging elevated costs due to factory upgrades and rising interest rates that impacted consumer affordability.
Key Performance Indicators
QoQ: -7.83% | YoY:-22.37%
QoQ: -26.47% | YoY:-52.17%
QoQ: -31.45% | YoY:-43.71%
QoQ: -31.76% | YoY:-44.76%
Key Insights
**Revenue:** $23.35 billion (YoY Increase: 8.84%, QoQ Decrease: 6.33%)
**Gross Profit:** $4.18 billion (Gross Margin: 17.8%, YoY Decrease: 22.37%, QoQ Decrease: 7.83%)
**Operating Income:** $1.76 billion (Operating Margin: 7.55%, YoY Decrease: 52.17%, QoQ Decrease: 26.47%)
**Net Income:** $1.85 billion (Net Margin: 7.93%, YoY Decrease: 43.71%, QoQ Decrease: 31.45%)
**EPS:** $0.58 (Diluted EPS: $0.53)
**Current Ratio:** 1.69
**Debt:** $8.19 billion, providing a low debt ratio of 0.039...
Financial Highlights
Revenue: $23.35 billion (YoY Increase: 8.84%, QoQ Decrease: 6.33%)
Gross Profit: $4.18 billion (Gross Margin: 17.8%, YoY Decrease: 22.37%, QoQ Decrease: 7.83%)
Operating Income: $1.76 billion (Operating Margin: 7.55%, YoY Decrease: 52.17%, QoQ Decrease: 26.47%)
Net Income: $1.85 billion (Net Margin: 7.93%, YoY Decrease: 43.71%, QoQ Decrease: 31.45%)
EPS: $0.58 (Diluted EPS: $0.53)
Current Ratio: 1.69
Debt: $8.19 billion, providing a low debt ratio of 0.0394, enhancing financial stability amid volatility.
Free Cash Flow: $849 million, reinforcing cash position amid operational changes.
Income Statement
| Metric |
Value |
YoY Change |
QoQ Change |
| Revenue |
23.35B |
8.84% |
-6.33% |
| Gross Profit |
4.18B |
-22.37% |
-7.83% |
| Operating Income |
1.76B |
-52.17% |
-26.47% |
| Net Income |
1.85B |
-43.71% |
-31.45% |
| EPS |
0.58 |
-44.76% |
-31.76% |
Key Financial Ratios
operatingProfitMargin
7.55%
operatingCashFlowPerShare
$1.04
freeCashFlowPerShare
$0.27
priceEarningsRatio
107.22
Management Commentary
Production and Automation Improvements:
Elon Musk emphasized the potential for production capacity enhancement stating, "there's still meaningful room for improvement" and noted that delivery volumes must be maximized despite factory upgrades.
Cybertruck Ramping Expectations:
Management tempered expectations for the Cybertruck, projecting volume production challenges but highlighting significant demand with over 1 million reservations. Musk stated, "the demand is off the charts," but emphasized that financially, the Cybertruck may not contribute to positive cash flow for 1 - 1.5 years.
Focus on Cost Reductions:
CFO Vaibhav Taneja noted, "reducing the cost of our vehicles is our top priority," indicating operational expense control is vital given inflationary pressures. He added to the investment in R&D for AI technologies and emphasized ongoing cost management as vital amidst rising vehicle prices due to fluctuating interest rates.
"reducing the cost of our vehicles is our top priority," - Vaibhav Taneja, CFO
— Vaibhav Taneja
"the demand is off the charts, we have over 1 million people who’ve reserved the car." - Elon Musk, CEO
— Elon Musk
Forward Guidance
Management anticipates around 1.8 million vehicle deliveries for the year, significantly focusing on AI advancements and automatic vehicle production. However, the economic landscape, especially rising interest rates, is expected to pose significant headwinds. Hence, a watchful approach toward cost adjustments and production efficiencies is encouraged. CEO Musk indicated that achieving long-term growth rates of 50% is not sustainable without macroeconomic stability: "it is not possible to have a compound growth rate of 50% forever".