Tesla's Q3 Revelation: Making Cars Is No Longer Sexy, Musk Aims to Earn Trillions by "Making Humans"
Tesla has delivered an extremely "divided" Q3 report card.
On the one hand, there is a record revenue: both the operating income and vehicle deliveries reached new all - time highs. The revenue soared to $28.1 billion, a year - on - year increase of 11.6%. In Q3, a record 497,000 vehicles were sold. The figures were so impressive that analysts' forecasts seemed rather conservative.
However, after the earnings report was released, the capital market was not convinced.
The stock price tumbled during the after - hours trading that day and accelerated its decline during Musk's participation in the conference call, with a maximum decline of nearly 5% at one point. Based on the closing market value of $1.46 trillion that day, Tesla's market value plummeted by nearly $73 billion, equivalent to about 520 billion yuan.
As of press time, the pre - market trading price was still down by more than 3%.
Some may attribute the reason to the situation of "increasing revenue but not profit". However, a deeper reason might lie in Musk's attitude at the earnings meeting. He avoided talking about the dismal performance and instead painted a rosy picture of the future.
01 More problems, less profit
It's no wonder that the market is not convinced. Generally speaking, Tesla's report card fails to meet the market's expectations.
On the positive side, the revenue from the automotive business alone reached $21.2 billion, a 6% increase from $20 billion in the same period last year. Among them, the revenue from vehicle sales increased by 8.1% year - on - year to $20.359 billion. The last time the revenue from vehicle sales exceeded $20 billion was in the fourth quarter of 2023.
This is mainly due to the record vehicle sales. Tesla delivered 497,000 new vehicles globally in the third quarter, a 7.4% year - on - year increase, far higher than the market's estimated 439,600 vehicles. The performance in the Chinese market was particularly outstanding. The sales volume in the third quarter reached 169,200 vehicles, a sharp 31% increase from the previous quarter. Among them, the Shanghai Gigafactory delivered more than 90,000 vehicles in September alone.
The "increase in sales volume" was within the expectations of many market analysts. The reason is that the US federal electric vehicle tax credit policy was about to expire on September 30. The "last - train" effect drove Tesla to achieve the highest quarterly delivery volume in history.
However, on the negative side, although more cars were sold, the profit decreased. That is, the revenue increased but the profit did not.
In the third quarter, Tesla's operating profit was $1.624 billion, a significant 40% year - on - year decrease. The operating profit margin was only 5.8%, almost half of the 10.8% in the same period last year.
As for the net profit in the third quarter, it was even worse. It was only $1.37 billion, compared with $2.17 billion in the same period last year, a 37% year - on - year decrease. It has been declining year - on - year for four consecutive quarters. The earnings per share also decreased by 37% year - on - year to $0.39. The adjusted earnings per share were $0.50, lower than the market's expected $0.54.
The overall gross profit margin has dropped to 18%. If the regulatory credits are removed, the gross profit margin of the automotive business is only 15.4%, slightly lower than the market's expected 16.3%.
In contrast, the rapid growth of the energy storage business has become Tesla's second growth curve, reaching $3.415 billion, a 44% year - on - year increase, a new all - time high. Moreover, the gross profit margin is as high as 32%, becoming an important driving force for boosting revenue and profit this quarter.
But it also means that without the support of the energy storage business, Tesla's overall performance in the third quarter would have been even more dismal.
Tesla summarized several reasons for the significant decline in profit. One is the continuous decline in the net profit from "carbon credit sales". The regulatory credit revenue from Tesla's automotive business decreased from $739 million in the same period last year to $417 million, a year - on - year decrease of 44%.
In addition, there is the impact of tariffs. Musk had already given a warning about this. In the earnings conference call in July this year, Musk and Chief Financial Officer Vaibhav Taneja warned shareholders that higher tariff costs and the expiration of the tax credit policy would have an impact on the company's performance.
According to Tesla's disclosure at the earnings meeting, the additional costs from tariffs alone reached about $400 million.
Finally, and also the internal reason that Tesla is most reluctant to talk about, is the decline in the unit price of vehicles due to the price war and the launch of the affordable Model Y, which directly led to the decline in the profit per vehicle in the third quarter.
In the third quarter, the average price of a vehicle dropped to $42,700 (about 304,000 yuan), a 1.35% year - on - year decrease and a 1.65% quarter - on - quarter decrease. The net profit per vehicle was only $2,800. If the regulatory income is excluded, it is only $1,100.
In addition, the significant increase in operating expenses is also a major factor dragging down the profit in the third quarter. This expense increased by 50% year - on - year to $3.43 billion and 16% quarter - on - quarter.
Specifically, the R & D expenses were $1.63 billion, a 56.88% year - on - year increase and a 2.58% quarter - on - quarter increase, almost equivalent to investing 130 million yuan per day. The selling, general and administrative expenses were $1.562 billion, also a 31.70% year - on - year increase and a 14.35% quarter - on - quarter increase. Tesla said that this part of the expenditure is related to AI and other R & D projects.
Fortunately, Tesla still has a considerable reserve. In the third quarter, the total amount of cash, cash equivalents and investments reached $41.647 billion (about 296.797 billion yuan), a 24% year - on - year increase. The free cash flow reached $3.99 billion, a 46% year - on - year increase.
02 Musk wants to control the robot army
Actually, those who know Tesla well are aware that whenever Tesla's "reality" is dismal, Musk will play the "future" card, and this time is no exception.
At the beginning of the earnings meeting, Musk claimed that Tesla is at a critical turning point of "bringing AI into the real world".
What he meant was that the electric vehicle business cannot support Tesla's grand future and its nearly $1.5 trillion market value. Therefore, Musk hardly mentioned the automotive profit and sales situation in this conference call.
Instead, he shifted the focus of the narrative to artificial intelligence and talked at length about four things: AI chips, autonomous taxis (Robotaxi), FSD, and the humanoid robot Optimus.
First of all, Musk showed unprecedented confidence in solving "unsupervised full - self - driving" (Unsupervised FSD). "Based on what we are seeing now and a clear understanding of achieving unsupervised full - self - driving, I would say that I am confident in expanding Tesla's production scale," this confidence prompted him to decide to "expand vehicle production as fast as we can".
The vehicles for which the production scale will be expanded are the autonomous vehicles Cybercab, which are planned to be produced in the second quarter of 2026. According to Musk's prediction, Tesla has the potential to reach a production capacity of 3 million in 24 months, and the core increment will come from this vehicle.
When it comes to the current progress of FSD, Musk is rather stingy with information. Currently, the proportion of Tesla's FSD paid users among all vehicle owners is about 12%. FSD V14 has been available for self - upgrade in the United States.
But in other parts of the world, Tesla's answer remains "waiting for the approval of relevant regulatory authorities".
However, Musk didn't forget the old users. It is expected that a lite version of FSD V14 (simplified version) for Hardware 3 models will be launched in Q2 of 2026 to cover more old users.
Since the cumulative mileage of FSD has exceeded 6 billion miles (about 9.656 billion kilometers), it seems to have given Musk more confidence to gradually expand the scope of full - autonomy.
This is mainly reflected in the Robotaxi. Musk plans to gradually remove the safety drivers in the next few months. At least by the end of the year, fully autonomous services will be launched in Austin, and the operating area of Robotaxi will be expanded to 8 - 10 areas. Of course, these services will be operated by Tesla's existing models, while the original plan for the real - world operation of Robotaxi is still the Cybercab without a steering wheel and pedals.
When talking about the upcoming mass - produced AI5 chip, Musk boasted about it, saying that in some scenarios, it has a 40 - fold improvement compared with the AI4 chip. It will be jointly produced by TSMC and Samsung to ensure the production capacity, and the surplus can be used for AI training.
Finally, there is the humanoid robot Optimus, which is also the most "exciting" part of this earnings meeting. Musk said in the conference call that the humanoid robot Optimus has the potential to become the "biggest" project in history.
Moreover, Musk linked his $1 - trillion compensation plan directly to Tesla's humanoid robot project Optimus. In the conference call, Musk referred to the future scale of Optimus as "Robot Army".
He said that he would not be willing to promote the construction of the "robot army" without sufficient control.
Musk said directly in the meeting: "My fundamental concern about my voting control at Tesla is whether I will be ousted in the future if I build this robot army. This is the only problem I'm trying to solve, that is, whether I still have strong influence. If I don't have strong influence, I'm not willing to build this robot army."
It is worth mentioning that one of the goals for Musk to receive this trillion - dollar compensation is to deliver 1 million Optimus robots.
According to the plan, Tesla plans to prepare prototype products in the first quarter of next year. Tesla will build a production line with an annual output of one million Optimus robots and hopes to start production by the end of next year, but there will also be a production ramp - up process. By the Optimus 4 era, the annual output will reach 10 million; in the subsequent Optimus 5 era, the annual output will be about 50 - 100 million.
Obviously, it can be seen that Musk has high expectations for Optimus. Otherwise, he wouldn't have taken precautions against the so - called "killing the donkey after it has done its work".
Will the robot era that Musk is looking forward to arrive as scheduled?
This article is from the WeChat public account "SuperEV - Lab" (ID: SuperEV - Lab), author: Wang Lei. Republished by 36Kr with permission.