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Tesla Q3 results 2022: Strong top and bottomline growth amid supply chain constraints

Tesla Q3 results 2022: Strong top and bottomline growth amid supply chain constraints

Last updated: 27 Oct, 2021 | 02:56 pm

Tesla Q3 results 2022: Strong top and bottomline growth amid supply chain constraints

Income rises: Tesla has reported a sharp rise of 389% in net income to $1.62 billion in (GAAP) for the quarter ended Sep, surpassing $1 billion for the second straight time. In the year-ago quarter, net income was $331 million. The record results were driven by improved gross margins of 30.5% on its automotive business and 26.6% overall.

Upbeat revenue: Total revenue grew 57% on year in Q3 to $13.8 billion. This was primarily achieved through growth in vehicle deliveries, as well as growth in other parts of the business. Automotive revenue rose to $12.06 billion. Tesla also generated $806 million in revenue from its energy business, which combines solar and energy storage products, and $894 million in services and other revenue, which includes vehicle maintenance and repairs, auto insurance and sales of Tesla-branded merchandise among other things.

Auto Sales data: Tesla has disclosed deliveries of 241,391 electric vehicles, up by 73% from last year and production of 237,823 vehicles during the period ending September 30, 2021. Unlike other automakers, Tesla’s sales rose during the quarter, setting a new company record, despite chip shortages and supply chain challenges weighing on the industry. Even with those issues, the company reiterated prior guidance that it expects to “achieve 50% average annual growth in vehicle deliveries” over a multi-year horizon.

At the same time, vehicle ASP (averaged selling price) declined by 6% YoY as the Model S and Model X mix reduced in Q3 due to product updates and also as lower ASP vehicles became a larger percentage of its mix.

Tesla remained non-committal on the start date for production of the most anticipated Cybertruck. The company is saying only that production of the non-traditional truck will begin at some point after Model Y production commences in Austin, where Tesla is building a new vehicle assembly plant.

Operating performance: The company’s operating income rose 148% on year to $2.0B in Q3 compared to $809 million in the same period last year, resulting in a 14.6% operating margin. Operating income increased substantially mainly due to vehicle volume growth and cost reduction. Positive impacts were partially offset by ASP decline, growth in operating expenses, lower regulatory credit revenue, additional supply chain costs, Bitcoin-related impairment of $51M and other items.   

Cash: Operating cash flow less capex (free cash flow) decreased by 5% on year to $1.3B in Q3. The company has paid net debt and finance lease repayments of $1.5B in Q3. In total, there was a $164M decrease in its cash and cash equivalents in Q3 to $16.1B from the previous quarter.

Tesla Q3 results review:

The third quarter of 2021 was a record quarter for Tesla in many respects beating street estimates. The company achieved its best-ever net income, operating profit and gross profit. Additionally, it reached an operating margin of 14.6%, exceeding their medium-term guidance. The operating margin reached an all-time high as it continued to reduce cost at a higher rate than declines in ASP. EV demand continues to go through a structural shift. However, a variety of challenges, including semiconductor shortages, congestion at ports and rolling blackouts, have been impacting their ability to keep factories running at full speed. 

During the third quarter, Tesla recorded a $51 million impairment related to its investment in bitcoin, which it reported under “restructuring and other” expenses.