The what, why and how of Tesla beating shortage woes en route record revenue

US EV giant Tesla posted record revenue for the fifth consecutive quarter for the July to September period on the back of record deliveries, beating Wall Street expectations for its third-quarter revenue. The automaker achieved the feat despite the ongoing coronavirus pandemic and global supply chain issues.

File photo of Tesla's electric cars at a dealership in the US. (Bloomberg)
File photo of Tesla's electric cars at a dealership in the US.

The record deliveries and revenue were supported by a production build-up at its Chinese factory. Now the carmaker says that its upcoming factories and supply-chain headwinds will put pressure on its margins. The company faces challenges growing its earnings in coming quarters due to supply chain issues as well as the time needed to ramp up production at its new factories in Berlin and Texas. "There's quite an execution journey ahead of us," said Tesla's Chief Financial Officer Zachary Kirkhorn, Reuters reported.

He added that price fluctuations of raw materials such as nickel and aluminum have also created an "uncertain environment with respect to cost structure". However, referring to the quarter four, he said that Tesla was "quite a bit ahead" of its plan to increase deliveries by 50% this year. "Q4 production will depend heavily on availability of parts, but we are driving for continued growth," he explained.

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Tesla's third quarter revenue grew to $13.76 billion from $8.77 billion a year earlier, beating the expectations of analysts, as per data from IBES. The company's automotive gross margin, excluding environmental credits, rose to 28.8%, from 25.8% the previous quarter.

The EV giant's overall average price fell as it sold more lower-priced Model 3 and Model Y EVs, but it raised prices in the US. In China, the company posted strong sales, where its low-cost Shanghai factory has surpassed the factory in California in terms of production.

Tesla posted $279 million in revenue from sales of environmental credits in the third quarter, 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.

(with inputs from Reuters)

First Published Date: 21 Oct 2021, 09:51 AM IST
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