Tesla Inc. has reported a decrease in quarterly profits for four consecutive quarters, despite total sales increasing. Following the announcement, the company's shares declined by 3.5% in after-hours trading. Tesla has reported third-quarter earnings of $1.4 billion, or 39 cents per share, which is less than $2.2 billion, or 62 cents per share, it made in the same period a year earlier.
The revenue increased to $28.1 billion as compared to $25.2 billion last year. Yet, the profit margins were still influenced by increased production and material costs. Gross margins were 18%, the highest this year, but still very low compared to the 25% of four years ago.
Analysts observed that the temporary sales increase was partly due to a rush by customers to buy vehicles ahead of the expiration of a federal EV tax credit of up to $7,500 on October 1. Sales of electric cars increased by 7% in the quarter, driven by stable demand for battery storage systems and charging solutions. Yet, the performance, excluding certain charges, was $0.50 per share, which fell short of Wall Street's forecast of $0.56 per share.
Tesla's performance remains in contention among industry analysts. Brian Mulberry of Zacks Investment Management said that revenue growth indicates continued consumer interest in Tesla vehicles. Garrett Nelson of CFRA Research reiterated a "sell" rating on Tesla, citing doubts about the future of global demand for EVs and growing competition.
JPMorgan analysts further noted that the company would likely need to introduce new or lower-priced cars to continue growing. Although Tesla has recently introduced cheaper models of the Model Y and X, priced below $40,000, they have not been able to boost investor confidence.
Dan Ives of Wedbush Securities highlighted the increasing importance of Tesla, artificial intelligence, and automation programs. He said that innovation in these fields would add value to the company in the future.
During a conference call with investors, CEO Elon Musk redirected the discussion to the company's technology roadmap, rather than focusing on vehicle sales. He noted improvements in the Tesla robotaxi project, which will roll out fully autonomous cars in a few American cities by the end of the year.
The program, which has already been running in San Francisco, will be extended to Austin, Texas, and up to ten additional metropolitan areas. Musk also marketed Tesla's Optimus humanoid robots, which would be used at home and in industries. He explained that robots could be high-volume products that could transform Tesla's business model.