Tesla Expects to Miss Vehicle Delivery Targets for 2022, Q3 Revenues Miss Analyst Estimates

Tesla Chief Executive Elon Musk on Wednesday said he expected the company would miss its vehicle delivery targets this year, but downplayed concerns about softening demand after the company's revenue missed Wall Street estimates.

The billionaire told analysts on a conference call there was excellent demand for the fourth quarter, addressing investor concern that buyers could be discouraged by the weak global economy and high prices for Tesla vehicles.

But he said some logistics challenges would persist, with fourth-quarter deliveries tracking under 50 percent growth while production hit 50 percent growth.

"I wouldn't say we're recession proof, but it's certainly recession resilient," he said.

Shares fell 4.3 percent in after-market trading.

Tesla is expanding fast despite global economic jitters, and investors are closely watching for signs that the cooling economy would hurt demand.

The company's third-quarter automotive gross margin was 27.9 percent, missing analysts' estimates and down from 30.5 percent a year earlier.

Tesla's revenue for the third quarter was $21.45 billion (roughly Rs. 1.78 lakh crore), a record but short of analysts' estimates of $21.96 billion (roughly Rs. 1.83 lakh crore), according to IBES data from Refinitiv.

The company said it had a negative foreign exchange impact of $250 million (roughly Rs. 2,080 crore) on its earnings as the US dollar strengthened against major currencies.

"Raw material cost inflation impacted our profitability along with ramp inefficiencies" from its new factories in Berlin and Texas, and the production of its new 4,680 batteries, according to Tesla's statement. Musk added that production of the 4,680 battery was gaining rapid traction, although executive Andrew Baglino said, "There are challenges still ahead that we have not yet surpassed. No doubt."

Musk also said the company has the ability to do a stock buyback in the range of $5 billion (roughly Rs. 42,000 crore) to $10 billion (roughly Rs. 83,000 crore), pending board review and approval.

Path to pass Apple market share

Early this month, Tesla said it delivered 35 percent more vehicles in the July-September period than in the previous quarter, but the record number was shy of vehicle production and analysts' estimates.

The electric vehicle pioneer has seen its shares tumble about 50 percent from record highs last November as investors were spooked by a cooling global economy and Musk's bid to buy social media company Twitter.

Musk told the conference call he saw a path for Tesla to be worth more than two mammoth companies, Apple and Saudi Aramco, combined. Tesla's market cap is now under $700 billion (roughly Rs. 60 lakh crore), while Apple is worth $2.3 trillion (roughly Rs. 200 lakh crore) and oil producer Saudi Aramco is worth $2.1 trillion (roughly Rs. 180 lakh crore).

Analysts had expected Musk to voice optimism about Tesla in the conference call. Musk has been trying to raise cash to fund his $44 billion (roughly Rs. 3.6 lakh crore) deal to take Twitter private. Some experts say Musk may need to sell about $3 billion (roughly Rs. 25,000 crore) more in stock after the earnings announcement to help fund the deal.

Musk on Wednesday said he was excited about his pending acquisition of Twitter, although he and other investors were overpaying for the social media company.

Musk also said Tesla's Cybertruck pick-up truck was on track to enter production in the middle of next year and its heavy-duty semi-truck, which will begin deliveries later this year, could see 50,000 units in North America in 2024.

© Thomson Reuters 2022