Tesla Reports Record $1.6 Billion Quarterly Profit

Tesla Reports Record Third Quarter Profit

Tesla sustained its period of profitability, announcing on Wednesday a net income of $1.62 billion for the third quarter. This represents an almost fivefold increase compared to the $331 million earned during the corresponding period last year.

This record-breaking profit was achieved despite ongoing global challenges, including a semiconductor shortage and broader supply chain disruptions impacting the automotive industry. Record sales volumes were a key contributor to this financial success.

Financial Performance Highlights

Tesla’s net income, calculated on a GAAP basis, reached a new high, even with the majority of vehicle sales originating from its more affordable Model Y and Model 3 electric vehicles.

A Bitcoin-related impairment of $51 million was recorded during the quarter, which concluded on September 30. Following the earnings report, shares experienced a slight decrease of less than 1% in after-market trading, settling at $859.80.

Operating income reached $2 billion, demonstrating a year-over-year increase from $809 million. Furthermore, operating income saw a substantial 54% growth compared to the $1.3 billion reported in the second quarter.

The company generated $13.76 billion in revenue during the third quarter, a 56% increase from the $8.77 billion reported in the same period last year. Revenue also exceeded the previous quarter’s figure of $11.96 billion by 15%.

Automotive Revenue and Margins

Although Tesla positions itself as a diversified energy, technology, and sustainability company, the majority of its revenue continues to be derived from electric vehicle sales.

Automotive revenue for the third quarter totaled $12 billion, a 50% increase year-over-year. Revenue from the sale of regulatory credits amounted to $279 million, the lowest figure since the fourth quarter of 2019.

Automotive gross margins, calculated on a GAAP basis, increased to 30.5%, establishing a new historic high for this metric.

Analyst Expectations

The reported results surpassed analyst predictions. Revenue expectations, as surveyed by Yahoo Finance, were set at $13.62 billion.

Factset forecasts anticipated revenue of $13.6 billion alongside a profit of $1.3 billion.

Future Growth Drivers and Challenges

Currently, the company’s success is largely dependent on its capacity to manufacture and deliver electric vehicles, alongside the broader availability of its Full Self-Driving (FSD) software to customers who have already purchased it.

Tesla is also facing increased scrutiny from regulators regarding its practice of releasing beta software to a limited group of owners.

The company acknowledged in its earnings report that “a variety of challenges, including semiconductor shortages, congestion at ports and rolling blackouts, have been impacting our ability to keep factories running at full speed.” This indicates that demand remains strong, with production limited by logistical and supply chain constraints.

Energy Storage and Solar Performance

Energy storage deployments, measured in megawatt-hours, increased by 71% year-over-year, driven by growth in the Megapack commercial product. However, growth slowed between the second and third quarters, showing only a 1.6% increase in deployed MWh.

Solar energy installations reached 83 megawatts in the third quarter, a 46% year-over-year increase, but a 2.35% decrease from the second quarter. This represents the lowest solar installation figure reported in 2021.

Record Vehicle Deliveries

These positive results followed record deliveries of Model 3 and Model Y vehicles in the third quarter. The automaker delivered 241,391 electric vehicles, exceeding expectations while other U.S. automakers experienced sales declines due to the global chip shortage.

The majority of Tesla deliveries – approximately 96% – consisted of the Model 3 sedan and Model Y crossover. Only 9,275 vehicles delivered were Model X and Model S.

Deliveries increased by 20% compared to the second quarter and were 73% higher than the same period last year.

Production figures also reached a new high, with Tesla producing 237,823 electric vehicles in the third quarter.