Tesla’s recent financial report indicates a contrast between record quarterly revenue and declining profits. For the three months ending in September, the company announced revenue of $28 billion (£21 billion), marking a 12% increase year-on-year. Despite this growth in revenue, Tesla experienced a 37% decrease in profits during the same period. The reduction in profits is attributed to various costs, including tariffs and increased spending on research and development.
This financial report precedes a crucial shareholder vote scheduled for November regarding a compensation package for CEO Elon Musk, potentially valued at up to $1 trillion. Following the announcement of its earnings, Tesla’s stock fell approximately 3.7% in after-hours trading.
Tesla’s current market valuation stands at roughly $1.4 trillion, buoyed by investor optimism about Musk’s vision to position Tesla as a leader in artificial intelligence and robotics. However, vehicle sales continue to be the primary revenue driver for the company, amidst growing competition from other automakers, especially Chinese manufacturers like BYD.
In recent months, Tesla reversed a trend of declining quarterly sales, driven in part by a surge in American buyers who aimed to secure federal tax credits of up to $7,500 before their expiration at the end of September. Nonetheless, competitors such as Ford and Hyundai reported even stronger sales growth during this period.
This quarter, Tesla introduced a six-seat variant of its Model Y, which performed particularly well in China, and expanded its financing options with incentives like five-year interest-free loans and insurance subsidies. The company also continues to face challenges from tariffs on imported car parts and raw materials, with Tesla’s finance chief estimating that these tariffs cost the company over $400 million in the last quarter. Increased expenditures for research and development, particularly related to AI, are also expected to continue influencing profitability moving forward.
Source: https://www.bbc.com/news/articles/cql9yqxllqdo?at_medium=RSS&at_campaign=rss