Tesla Says New Factories Will Need Time to Ramp Up, Posts Record Revenue Due to Record Deliveries

Tesla is "quite a bit ahead" of its plan to increase deliveries by 50 percent this year, as per the company’s chief financial officer.

By Reuters | Updated: 21 October 2021 12:09 IST

Tesla Says New Factories Will Need Time to Ramp Up, Posts Record Revenue Due to Record Deliveries

Tesla's overall average price fell as it sold more lower-priced Model 3 and Model Y cars

Highlights

Tesla shares were up about 23 percent this year
Musk was not present on the quarterly earnings call for the first time
The company posted robust sales in China

Tesla said on Wednesday its upcoming factories and supply-chain headwinds would put pressure on its margins after it beat Wall Street expectations for third-quarter revenue on the back of record deliveries.

The world's most valuable automaker has weathered the pandemic and the global supply-chain crisis better than rivals, posting record revenue for the fifth consecutive quarter in the July-to-September period, fueled by a production build-up at its Chinese factory.

But the company led by billionaire Elon Musk faces challenges growing earnings in coming quarters due to supply chain disruptions and the time required to ramp up production at new factories in Berlin and Texas.

[Sponsored] Samsung Galaxy S24: The Ultimate Camera Phone With Smarter On-Device AI

"There's quite an execution journey ahead of us," Chief Financial Officer Zachary Kirkhorn said, referring to the new factories.

Price fluctuations of raw materials such as nickel and aluminium had created an "uncertain environment with respect to cost structure", he added.

Even so, he said Tesla was "quite a bit ahead" of its plan to increase deliveries by 50 percent this year.

Tesla Pushing Volkswagen to Accelerate Electric Vehicle Shift, Company Says on Competition

"Q4 production will depend heavily on availability of parts, but we are driving for continued growth," he said.

Tesla shares, up about 23 percent this year, were down about 0.6 percent in extended trade late on Wednesday.

Musk himself was not present on the quarterly earnings call for the first time, a development that may have disappointed those investors keen to hear the celebrity CEO's latest thoughts.

Third-quarter revenue rose to $13.76 billion (roughly Rs. 1,02,840 crores) from $8.77 billion (roughly Rs. 65,540 crores) a year earlier, slightly beating analyst expectations according to IBES data from Refinitiv.

Tesla's automotive gross margin, excluding environmental credits, rose to 28.8 percent, from 25.8 percent the previous quarter.

Tesla's overall average price fell as it sold more lower-priced Model 3 and Model Y cars, but it raised prices in the United States.

The company posted robust sales in China, where its low-cost Shanghai factory has surpassed the Tesla factory in Fremont, California, in terms of production.

Tesla also said it intended to use lithium iron phosphate (LFP) battery chemistry, which is cheaper than traditional batteries but offers lower range, in entry-level models sold outside China. Analysts said this would help keep costs down and address shortages.

It expected the first vehicles equipped with its own 4680, bigger battery cells to be delivered early next year, although it did not say which model would be fitted with them. Musk said in September last year that using its own cells would let Tesla offer a $25,000 (roughly Rs. 18.6 lakhs) car in three years.

In the third quarter, Tesla posted $279 million (roughly Rs. 2,085 crores) in revenue from sales of environmental credits, the lowest level in nearly two years. The company sells its excess environmental credits to other automakers that are trying to comply with regulations in California and elsewhere.

Realme India CEO Madhav Sheth joins Orbital, the Gadgets 360 podcast for an exclusive wide-ranging interview, as he talks about the 5G push, Make in India, Realme GT series and Book Slim, and how stores can improve their standing. Orbital is available on Spotify, Gaana, JioSaavn, Google Podcasts, Apple Podcasts, Amazon Music and wherever you get your podcasts.

Affiliate links may be automatically generated - see our ethics statement for details.

Comments

For the latest tech news and reviews, follow Gadgets 360 on X, Facebook, WhatsApp, Threads and Google News. For the latest videos on gadgets and tech, subscribe to our YouTube channel. If you want to know everything about top influencers, follow our in-house Who'sThat360 on Instagram and YouTube.