Tesla is experiencing supply shortages, logistics obstacles, and escalating expenses as it rapidly increases the manufacturing of its electric vehicles.
Tesla stated in a financial update to investors that while the problems have lessened in recent months, they remain immediate obstacles.
Car sales fell short of projections in the three months ending in September, resulting in a revenue shortfall.
However, at $21.45 billion (£19.12 billion), it remained over 50% greater than a year before.
In recent years, Tesla, led by billionaire Elon Musk, has expanded quickly, constructing new factories in the United States, China, and Germany and increasing production.
The corporation delivered 343,000 automobiles throughout the quarter, a record that was greater than forty percent higher than the same period last year.
The company produced more automobiles than were sold, causing concern that demand may be declining due to rising pricing, greater borrowing costs, and a significant economic slowdown in the vital China market.
Mr. Musk acknowledged China’s downturn but refuted claims that demand was waning.
When Tesla announced its delivery numbers earlier this month, the firm attributed the discrepancy to a lack of available transport vehicles.
“There weren’t enough boats, trains, or car carriers,” he said on a conference call to discuss the results, adding that the company anticipates selling every car it produces.
The company claimed that deliveries of its highly awaited electric truck will begin in December. The corporation reported a profit of $3.3 billion, a considerable increase from the prior year.
In recent months, though, concerns over Tesla’s development trajectory and Mr. Musk’s billions of dollars in stock sales as he pursues a $44bn buyout of Twitter have weighed on the company’s stock price.
The share price has decreased by 40% this year, reducing the worth of the corporation by billions of dollars. Wednesday’s after-market trade saw a 4% decline in its stock price.
“I believe Tesla had a difficult quarter, and the market is reacting accordingly,” Sarah Kunst, managing director of Cleo Capital, said.
“The car industry as a whole is having a difficult time right now because supply chain issues persist and batteries – especially for electric vehicles – are difficult to obtain,” she said.
And the reality is that Tesla was once the only place to purchase a high-end electric vehicle, but that is no longer the case.
Tesla dominates the market for electric vehicles in the United States, but it faces significantly greater competition in Europe and China, where these vehicles are more prevalent.
In the United States, competitors have also increased their efforts.
BMW announced on Wednesday that it will invest $1.7 billion to increase its electric vehicle production in the United States.
A few months ago, Elon Musk, who is no shrinking violet when it comes to self-promotion, asserted that the demand for Tesla automobiles was through the sky.
“Demand currently exceeds supply by a ludicrous amount,” he remarked.
Nevertheless, based on these numbers, this does not appear to be the case.
Tesla produces more vehicles than it sells.
In addition, several financial factors diminish profitability. Issues with the supply chain and the price of raw materials hurt earnings.
However, investors are significantly more worried about Tesla’s long-term potential than its short-term financial challenges.
Therefore, the uncertainty surrounding Tesla’s demand is very detrimental. It helps to explain why Tesla’s share price has declined despite a seemingly strong set of earnings.
This also explains why Mr. Musk attempted to suppress the discussion of demand difficulties during the results call. “I cannot emphasize enough how strong the demand is for [the fourth quarter], and we anticipate selling every car we produce for the foreseeable future,” he said.
However, many Tesla investors are concerned that Mr. Musk is devoting insufficient attention to the company since pledging to acquire Twitter. These findings are unlikely to alter this viewpoint.
