Tesla Inc (NASDAQ:TSLA) earnings updates are always full of many moving parts for its legion of investors on both sides of the Atlantic to chew over - and this week's was no different
In terms of top-level numbers earnings impressed, but then the shares tanked today - with a lot more going on beneath the surface at Elon Musk's electric vehicle star.
1 . Self-driving EVs behind schedule
Having originally expected its advanced driver assistant software to gain regulatory approval in 2022, but Musk has now admitted it would not be able to satisfy authorities that its cars can be driven without someone behind the wheel before the year-end.
It already offers a US$15,000 software add-on called ‘Full Self Driving,’ which changes lanes and parks autonomously.
That coincides with the standard ‘Autopilot’ feature that steers the car, as well as accelerating and braking within their lanes without the need for a driver.
Despite Tesla’s vehicles not being ready enough to have no one behind the wheel, the company insisted drivers would rarely have to intervene with controls as things stand.
"The car will be able to take you from your home to your work, your friend's house, the grocery store without you touching the wheel," Musk commented on the earnings call.
2. Market share
Tesla's Q3 EV sales in America were more than seven times greater than their closest rival, Ford, with many of its single-model revenues exceeding several whole brands, according to its numbers.
Almost two-thirds (63%) of the 205,682 EVs bought in America between July and September were Tesla cars - more precisely, 131,024 of them.
Its closest competitor sold just 18,257 in the whole country, according to KBB data, some 82% lower than the number offloaded by Musk’s company.
Tesla’s least popular vehicle, the Model X, managed to outsell EVs from Nissan, Mercedes Benz, Audi, Volvo, Rivian and Polestar despite only selling 6,552 of them.
3. Delivery growth target not met
Despite hitting record quarterly deliveries of 343,830, Musk confirmed the company would fail to meet its 50% annual delivery growth goal.
It was just the third quarter ever that Tesla delivered more than 300,000 vehicles, all of which being in the last 12 months.
In the first nine months of 2022, Tesla delivered 929,910 vehicles compared to roughly 936,000 in the whole of last year.
The world’s richest man confirmed it would fail to reach the key metric but vowed it to be “just under” the 50% target on logistical and supply chain problems.
Wall Street anticipates 2022 deliveries to be roughly 45% ahead of last year.
Musk, however, insisted demand remains strong into Q4 and that Tesla will sell every single car it makes in 2023.
It expects to produce and deliver roughly 2mln units next year.
4. Carbon credits
Carbon credits, formerly named regulatory credits by Tesla, continued to make up a chunk of its total revenues.
The EV maker generated US$286mln from offloading carbon credit, which was 1.3% of the overall Q3 revenues of US$21.45bn.
This was 17% lower than Q2 and 58% below the US$679mln in Q1.
Regulatory or carbon credits are government-issued corporate incentives to develop eco-friendly automobiles.
Tesla being the EV giant that it is, obtains a stockpile of these credits and being tradable, regularly sells them on to automotive manufacturers with less-green credentials.
In the past five years, Tesla has earned over US$5bn by selling carbon credits.
In simple terms, because Tesla is an EV company, it gets given carbon credits by the government as a reward for being so green.
It then sells these credits to carbon-emitting firms that exceed their allowance, generating 100% profit for Musk’s company given that the regulatory credits are free from the state.
5. Battery metals plans
In its Q3 results, Tesla unveiled plans to move forward with building a lithium refinery on the Texas Gulf Coast to try and improve its control over the supply chain for EV batteries.
It informed state regulators of its intentions to build a battery-grade lithium hydroxide refining facility that would process raw ore material into something closer to being production-ready.
The South African-born tycoon labelled lithium prices as “crazy expensive,” while often urging entrepreneurs to begin refining lithium to ease supply troubles.
Meanwhile, production of the super-efficient 4680 battery cell tripled quarter-on-quarter, with Tesla hoping to install the cells into cars in the next few months.
Musk stated that Tesla is “finally gaining rapid traction on the 4680 cell... output is growing rapidly, and we expect it to start incorporating in cars and having it be a significant portion of our production here in Texas in the coming months”.