Tesla Notches Record $1.6 Billion Quarterly Net As It Readies Global Production Push

Elon Musk at a party for Tesla’s brand new Giga Berlin factory in Grunheide located just east of Berlin.

Tesla’s steady supply of electrical Model Ys and 3s helped the company run by Elon Musk post record profits of $1.6 billion during the third quarter, despite issues with component sourcing that have affected the entire auto industry in the world as it prepares to launch massive new manufacturing facilities within Germany as well as Texas.

The company announced that earnings per share during the three months that concluded on September 30 grew by more than fourfold from one year ago to $1.44 on a GAAP basis or $2.09 without excluding certain factors. The consensus analyst estimates were $1.67. Revenue for the quarter of $13.8 billion, an increase of 57% over a previous quarter and roughly in line with analysts who expect as high as $13.9 billion. Credits for sales regulatory for other carmakers, which have been a long-time source of money for free, fell by 30 percent, up to 279 million.

“We have also been able to achieve an annualized run rate of nearly 1 million vehicles by the close in the fourth quarter. The hike in production is mainly due to increasing the capacity up of our Model Y at our Shanghai factory,” Tesla CFO Zack Kirkhorn stated in an earnings conference. However, “due to part shortages and logistics variability, we have not been able to run our factories at full capacity.”

Tesla is currently going through a transitional period this year, as it is preparing to increase production across the globe significantly. Tesla is awaiting approval from Germany to start production at its newly constructed Giga Berlin factory and is also scheduled to begin production in the Gigafactory in Texas, near Austin. The combination of these factories will increase its global production capacity by 50% by 2022.

In Austin, Texas, Tesla’s brand new plant is set to begin producing electric vehicles over the coming months.

“We believe the current supply chain issues have taken roughly 40,000 cars off the annual numbers for Tesla,” Dan Ives, an equity analyst at Wedbush Securities, stated 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 earlier reported that it had delivered 241,300 vehicles across the world in the last quarter, which was the highest ever. It also built 237,823 cars in its factories located in California in California, and China. The first quarter of this year, Tesla, moving their headquarters from Austin, Texas, has provided 627,427 vehicles worldwide to customers.

Its Fremont, California, plant has produced more than 430,000 electric vehicles in the last four quarters, making as many as 600,000. Additionally, its brand-new Shanghai, China, plant, a significant driver of exports of vehicles, was responsible for most of the growth in volume in the quarter. Tesla estimates that it could make around 450,000 Model 3s or Ys each year.

“China is the star of the show fol headwinds earlier this year,” said Ives, who holds an Outperform rating as well as a $1,000 target price for Tesla shares.

However, in the period, Tesla stated that it “saw an ongoing the global supply chain, transportation, and other manufacturing issues. We will continue to run our manufacturing lines to as close to their maximum capacity as the conditions permit.”

The company anticipates final approval to start German manufacturing of its Model Y before the end of the year. However, the production of high volumes will take several months to complete, Kirkhorn said. Its Austin plant will also produce Model Ys and, eventually, the one-way polarizing Cybertruck electronic pickup.

A Musk-less Results Call

Notably, Musk did not participate in the income conference call with analysts (as Musk claimed would occur earlier this year). In the past week, Musk tweeted his anger on Duke University professor of engineering and computer science Missy Cummings. She’s been appointed a senior advisor of the National Highway Traffic Safety Administration, the federal agency that oversees the rules for automobiles. Cummings has pointed out flaws of Tesla’s Autopilot system and raised concerns with the Full Self-Driving feature.

“Objectively, her track record is extremely biased against Tesla,” Musk tweeted to his 61 million followers. Cummings replied that she was glad to have a chat with him at any time.

However, during the earnings conference, Tesla executives said they welcomed NHTSA’s increased examination of the partially automated system for driving. Still, they stayed clear of any comments 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 Moravia, Tesla’s vice engineering president.

Kirkhorn, in a remarkably non-Musk manner, stated that the NHTSA’s report “is a great thing” for Tesla.

The stock was unchanged during the Nasdaq trade on Wednesday. It was climbing 0.2 percent for the day to $865.80. Forbes estimate that Musk’s wealth, as Tesla’s top shareholder, is $219.9 billion.

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Adam Collins
Adam writes about technology, business and economics. With master's degree in Economics, he's presented six papers in international conferences. As a solivagant in the constant state of fernweh, curiosity is the main weapon in his arsenal.

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