Tesla’s robust deliveries of electric Model Ys and 3s helped the Elon Musk-led carmaker post record net income of $1.6 billion in the third quarter, despite component sourcing headaches that have slowed the entire global auto industry, as it prepares to open massive new plants in Germany and Texas.
The company said earnings per share for the three months that ended on September 30 rose more than fourfold from a year ago to $1.44 on a GAAP basis or to $2.09, excluding certain items. Consensus analyst expectations were for $1.67. Quarterly revenue was $13.8 billion, up 57% from a year ago and in line with analysts’ expectations of as much as $13.9 billion. Sales regulatory credits to other automakers, a long-time source of free money, dropped 30% to $279 million.
“We were also able to achieve an annualized production run rate of over 1 million cars toward the end of the quarter. That increase in production rate has primarily been driven by further ramping of the Model Y at our Shanghai factory,” Tesla CFO Zack Kirkhorn said during an earnings call. Still, “due to part shortages and logistics variability we have not been able to run our factories at full capacity.”
The company is in a transition phase this year as it prepares to dramatically boost global production. Tesla is awaiting approval in Germany to begin building vehicles at its new Giga Berlin factory and also will soon begin production at its Gigafactory Texas near Austin. The addition of both facilities should boost its global production footprint by more than 50% in 2022.
“We believe the current supply chain issues have taken roughly 40,000 cars off the annual numbers for Tesla,” Dan Ives, an equity analyst with Wedbush Securities, said in a research note. “Despite this dynamic Musk & Co. should near the 900,000 mark for 2021 with a 1.3 million to 1.4 million unit bogey for 2022.”
Tesla previously reported delivering 241,300 vehicles worldwide in the quarter, the most ever, and built 237,823 cars at its plants in California and China. So far this year the company, which is shifting its headquarters to Austin, Texas, has delivered 627,427 vehicles to global customers.
The company’s Fremont, California, plant, which built more than 430,000 EVs in the last four quarters, currently can produce as many as 600,000 units. Meanwhile, its new Shanghai, China, plant, a major source of vehicle exports, accounted for much of the volume growth during the quarter. Tesla estimates it can produce more than 450,000 Model 3s and Ys annually.
“China is the star of the show after headwinds earlier this year,” said Ives, who has an Outperform rating and $1,000 target price on Tesla shares.
Still, during the quarter Tesla said it “saw a continuation of global supply chain, transportation and other manufacturing challenges. We continue to run our production lines as close to full capacity as conditions allow.”
The company expects final approval to begin German production of the Model Y before the end of the year, though high-volume output will takes months to achieve, Kirkhorn said. The Austin plant will also initially build Model Ys and, eventually, the polarizing Cybertruck electric pickup.
A Musk-less Results Call
Notably, Musk didn’t participate in the earnings call with analysts (as he said would likely be the case earlier this year). Earlier in the week he lashed out on Twitter at Duke University professor of engineering and computer science Missy Cummings, who’s been tapped to serve as a senior adviser to the National Highway Traffic Safety Administration, the federal agency that regulates automotive rules. Cummings has pointed out shortcomings in Tesla’s Autopilot system and taken issues with its so-called Full Self-Driving feature.
“Objectively, her track record is extremely biased against Tesla,” Musk tweeted to his 61 million followers. Cummings responded that she’s happy to sit down and with him anytime.
During the earnings call, however, Tesla executives said they supported NHTSA’s increased scrutiny of its partially automated driving system, while avoiding any comment on Musk’s tweets.
“We expect and embrace the scrutiny of these products and know that the truth about their performance and the innovations our products have will ultimately be all that matters,” said Lars Moravy, Tesla’s vice president of engineering.
Kirkhorn, in a very non-Musk response, said NHTSA’s review “is a great thing” for Tesla.
The stock was little changed in Nasdaq trading on Wednesday, rising 0.2% to close at $865.80. Forbes estimates Musk’s net worth, as Tesla’s biggest shareholder, is $219.9 billion.