Tesla's Q3 Profit Plummets 44% Amid Price Cut Impact

by Jo Youjin

Published 19 Oct.2023 06:04(KST)

Sales and Net Profit Both Fall Short of Market Expectations

U.S. electric vehicle company Tesla saw its margins significantly deteriorate in the third quarter of this year due to price cuts in its largest markets, the United States and China.

On the 18th (local time), Tesla announced in its earnings report that third-quarter revenue reached $23.35 billion (approximately 31.64 trillion KRW), a 9% increase compared to $21.454 billion in the same period last year. This figure was well below the market expectation of $24.1 billion.

During the same period, net profit sharply declined by 44% year-over-year to $1.853 billion (approximately 2.51 trillion KRW). Adjusted earnings per share were 66 cents, also falling short of the market expectation of 73 cents.

The operating margin was 7.6%, down 9.6 percentage points from 17.2% in the same period last year, and the gross margin was 17.9%, a decrease of 7.2 percentage points from 25.1% in the previous year.

In a shareholder letter released that day, Tesla explained, "The revenue cost per vehicle in the third quarter decreased to $37,500," adding, "Although production costs at new factories remain higher than those at existing plants, we implemented necessary upgrades in the third quarter to achieve additional unit cost reductions."

Earlier this month, Tesla announced that third-quarter vehicle deliveries fell 7% compared to the previous quarter. However, it maintained its annual production target of 1.8 million units for this year.