Tesla, Inc. just announced record vehicle sales for the last three months. The company nonetheless continues to face a worsening profit picture, having just registered its fourth straight quarter of red ink. Sales skyrocketed as consumers rushed to dealer after dealer to get their hands on a $7,500 federal tax credit for EV purchases. Unsurprisingly, they pushed to leverage the incentive before it expired on October 1. Sales have plummeted, but analysts are cautioning that gain could be more than meets the eye. They think it might be pulling sales forward from the recently completed fourth quarter.
According to its most recent earnings report, Tesla achieved a revenue increase to $28.1 billion for the July through September quarter. That’s a stunning jump from $25.2 billion the quarter before. This growth was beyond what Wall Street was anticipating and shows strong demand for Tesla cars. On another positive note, the company’s gross margins increased to 18%, their highest gross margin this year. This is a decrease of almost 9% from the same quarter last year. This trend highlights another persistent headwind for the firm.
Earnings took a tumble despite the rosy revenue picture, with Tesla earning only $1.4 billion on a per-share basis of 39 cents. That would be a staggering cut from $2.2 billion. Earnings for the same quarter last year came in at 62 cents per share. Tesla showed a profit of 50 cents a share when excluding some Tesla charges. That figure, 44 cents, is down from 72 cents per share last year and well below the 56 cent average that analysts expected.
The federal tax credit has jumpstarted sales and changed consumer buying patterns. Other analysts are already speculating that perhaps this demand rush forward sales, creating a headwind in the form of comparatively weak sales in future quarters. Elon Musk just a few months ago was projecting his sales to increase at 20% to 30% CAGR through 2025. Yet, the company has still not made it to those numbers.
