Tesla disappoints in quarterly results as discounts bite

Tesla disappoints in quarterly results as discounts bite

Visitors inspect a Tesla model 3 car on display at the International Motor Show held in Munich, southern Germany, on September 4, 2023
Visitors inspect a Tesla model 3 car on display at the International Motor Show held in Munich, southern Germany, on September 4, 2023. Photo: Tobias SCHWARZ / AFP
Source: AFP

PAY ATTENTION: #StartupSouth Awards 2023 Nominated Legit.ng in the category Best Startup Coverage! Your support matters - click to VOTE for Legit.ng for free!

Tesla's results for the third quarter missed analyst estimates on Wednesday, as the Elon Musk-run company was hit by higher costs and the fallout from price discounts.

The Texas-based electric vehicle giant said sales in the July to September period reached $23.35 billion, lower than the $24.19 billion forecasted by analysts polled by Factset.

The company also saw net profits come in less than hoped for, at 66 cents per share instead of 73 cents forecasted.

Musk has undertaken multiple price cuts throughout 2023 on vehicles, telling investors in April that the company has taken the view that pushing for higher sales is the right choice versus taking a bigger margin.

The move, which saw some prices cut by one third, came as more EVs from legacy carmakers like General Motors and Ford are hitting dealerships.

Read also

Netflix gains subscribers with ads and password crackdown

But those rivals have been punished by a major strike in the United States, something that Tesla will not have to navigate.

The price cuts have made investors nervous and Tesla's share price slid more than seven percent in the last month.

The Tesla stock valuation however still dwarfs other US car makers and it has more than doubled in 2023, comforting Musk's position as one of the world's two richest people.

Also rattling nerves, Tesla reported earlier this month that its new auto deliveries fell in the third quarter to 435,059 units because of downtimes at factories in Shanghai and Austin.

Production overall declined 10 percent from the second quarter to 430,488, according to the figures.

But Tesla on Wednesday confirmed that its full-year volume target of 1.8 million vehicles remained unchanged.

Read also

Transition trouble: German car suppliers struggle with electric shift

Tesla also said that it will stick to the timetable and release the new Cybertruck, Tesla's futuristic answer to the American pickup truck, by the end of this year.

'Look silly'

The company insisted that investing in AI and software that will soon deliver autonomous driving was the right investment.

"Autonomy will make all of these numbers look silly," Musk said on an earnings call in July.

While the market for electric vehicles has been on an unquestioned growth trajectory, signs emerged recently that the boom could be slowing.

General Motors said Tuesday it was delaying the conversion of a plant to produce electric vehicle (EV) trucks, citing changes in demand as a factor.

And higher interest rates have put a further brake on new car-buying after surfing on more than a decade of super low interest rates that enticed shoppers towards trading up to the latest models.

Read also

Dutch chip tech giant ASML posts sales dip, eyes bright future

Musk's unique status as a visionary entrepreneur who created SpaceX and Tesla has taken a knock since his buyout a year ago of Twitter, now renamed X, for $44 billion.

The tycoon's stewardship of X has proven to be tumultuous with lower advertiser spending and the platform increasingly seen as a toxic breeding ground for unmoderated speech and conspiracy theories.

Source: AFP

Authors:
AFP avatar

AFP AFP text, photo, graphic, audio or video material shall not be published, broadcast, rewritten for broadcast or publication or redistributed directly or indirectly in any medium. AFP news material may not be stored in whole or in part in a computer or otherwise except for personal and non-commercial use. AFP will not be held liable for any delays, inaccuracies, errors or omissions in any AFP news material or in transmission or delivery of all or any part thereof or for any damages whatsoever. As a newswire service, AFP does not obtain releases from subjects, individuals, groups or entities contained in its photographs, videos, graphics or quoted in its texts. Further, no clearance is obtained from the owners of any trademarks or copyrighted materials whose marks and materials are included in AFP material. Therefore you will be solely responsible for obtaining any and all necessary releases from whatever individuals and/or entities necessary for any uses of AFP material.