Tesla Q3 profit falls 43% despite beating analyst estimates

Tesla disclosed a 43% decrease in profits for the third quarter, while still surpassing analysts' predictions. The electric vehicle manufacturer, led by Elon Musk, invested substantially in new technologies. Based in Texas, Tesla reported profits of $787 million, a significant drop from the previous year. The decline was primarily caused by a slight reduction in vehicle sales and a decrease in revenues from regulatory credits, energy, and storage.

Simultaneously, expenditures on research and development surged. Revenue remained stable at $28 billion. The company emphasized its commitment to investing in the future through research and development, as well as capital expenditures, including the development of Super Intelligence and robotics. "Much hard work lies ahead, but we are as optimistic as ever," Tesla stated in the earnings release.

This announcement followed Musk's announcement earlier in the week that special committees of independent directors at both SpaceX and Tesla were established to discuss a possible merger. Analysts had anticipated a challenging quarter for Tesla's financial performance, as third-quarter auto sales exceeded estimates, largely due to increased European demand fueled by high gasoline prices.

However, higher sales did not always lead to improved earnings. Additionally, capital spending more than doubled to $4.7 billion, posing a significant financial burden. The company has also faced skepticism regarding the progress of its robotaxi venture, which has progressed slower than anticipated. Musk has consistently overestimated the timeline for self-driving technology, predicting more than a million robotaxis in 2020.

Currently, in Texas, where Tesla is focusing on the implementation of robotaxi services, there are approximately 800 such vehicles, according to the FSD Database. Tesla highlighted the launch of the robotaxi service in Austin in September, stating that cumulative unsupervised robotaxi miles had increased eightfold compared to the previous quarter.

The company also addressed concerns over a substantial increase in annual capital spending, projected to reach $25 billion or more, to support ambitious projects in artificial intelligence, robotics, and autonomous driving. Capital spending more than doubled in the third quarter to $4.7 billion. However, these financial concerns have been overshadowed by the potential merger between SpaceX and Tesla, which together have an equity value of over $3.5 trillion.

Analyst Garrett Nelson from CFRAResearch believes that a merger between the two companies is an imminent matter rather than a question of "if" but "when."