Tesla (TSLA) -) posted weaker-than-expected third quarter earnings Wednesday, as well as sharply lower profit margins, but stuck to its full-year forecast for 1.8 million vehicle deliveries as it continues to focus on market share growth over its bottom line.
Tesla said adjusted earnings for the three months ending in September were pegged at 66 cents per share, down 37.1% from the same period last year and well shy of the Street consensus forecast of 73 cents per share.
Group revenues, Tesla said, rose 9.1% from last year to $23.4 billion, again fall shy of analysts' forecasts of a $24.5 billion tally.
Adjusted automotive margins were 16.1%, Tesla said, well south of the 18.7% figure recorded over the first quarter and last year's second quarter tally of 23.2% following a series of price cuts in its biggest global markets.
Gross margins were 17.9%, down from 25.1% over the same period last year and the 18.2% figure recorded over the second quarter. Wall Street forecasts hovered between 17.8% and 18.2%.
"Our main objectives remained unchanged in Q3-2023: reducing cost per vehicle, free cash flow generation while maximizing delivery volumes and continued investment in AI and other growth projects," Tesla said. "Our cost of goods sold per vehicle4 decreased to ~$37,500 in Q3."
"While production cost at our new factories remained higher than our established factories, we have implemented necessary upgrades in Q3 to enable further unit cost reductions, Tesla said. "We continue to believe that an industry leader needs to be a cost leader."
Tesla shares were marked 1.8% higher in after-hours trading immediately following the earnings release to indicate a Thursday opening bell price of $246.99 each.
Tesla will need to deliver around 477,000 new vehicles over the final three months of the year to meet its stated goal of 1.8 million, but noted that it will launch its long-awaited Cybertruck next month, indicating it could meet or exceed the tally it put in place at the start of the year.
Tesla's third quarter deliveries, while the highest on record, missed Wall Street forecasts when they were published in early October, suggesting at least some demand headwinds linked to China's post-Covid sluggishness and looming recession risks in Europe.
China's Passenger Car Association noted last week that Tesla sold just over 74,000 cars in the world's biggest market last month, an 11% slide from last year and down from the 84,159 tally recorded in August.
The slowing sales will test Tesla's 2023 strategy, outlined earlier this year by Musk, of focusing on market-share growth at the expense of profit.
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