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Tesla reported its financial results for Q3 2023. Non-GAAP EPS was $0.66. Total Revenue Grew 9% YoY in Q3 2023 to $23.4B

Profitability
7.6% operating margin in Q3
$1.8B GAAP operating income in Q3
$1.9B GAAP net income in Q3
$2.3B non-GAAP net income in Q3

Cash
Operating cash flow of $3.3B in Q3
Free cash flow of $0.8B in Q3
$3.0B increase in our cash and investments QoQ to $26.1B

Operations
4.0 GWh of Energy Storage deployed in Q3
More than doubled AI training compute

Revenue

Total revenue grew 9% YoY in Q3 to $23.4B. YoY, revenue was impacted by the following items:
+ growth in vehicle deliveries
+ growth in other parts of the business
- reduced average selling price (ASP) YoY (excluding FX impact)
- negative FX impact of $0.4B

Profitability

Tesla's operating income decreased YoY to $1.8B in Q3, resulting in a 7.6% operating margin. YoY, operating income was primarily impacted by the following items:
- reduced ASP due to pricing and mix
- increase in operating expenses driven by Cybertruck, AI and other R&D projects
- cost of production ramp and idle cost related to factory upgrades
- negative FX impact
+ growth in vehicle deliveries (despite the margin headwind from underutilization from new factories)
+ lower cost per vehicle and IRA credit benefit
+ gross profit growth in Energy Generation and Storage as well as Services and Other
+ growth in regulatory credit sales

Cash

Quarter-end cash, cash equivalents and investments increased sequentially by $3.0B to $26.1B in Q3, driven by financing activities of $2.3B and free cash flow of $0.8B.

Tesla said, that its 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. Its cost of goods sold per vehicle decreased to ~$37,500 in Q3. While production costs at Tesla's new factories remained higher than its established factories, the company implemented necessary upgrades in Q3 to enable further unit cost reductions. Tesla continues to believe that an industry leader needs to be a cost leader.

During a high-interest rate environment, the company believes focusing on investments in R&D and capital expenditures for future growth, while maintaining positive free cash flow, is the right approach. Year-to-date, Tesla's free cash flow reached $2.3B while its cash and
investments position continues to improve.

© 2023, Eva Fox | Tesmanian. All rights reserved.

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This article is for informational purposes only. You should not construe any such information or other material as an investment, financial, or other advice. Nothing contained in this article constitutes a solicitation, recommendation, endorsement, or offer by Eva Fox, Tesmanian, or any third party service provider to buy or sell any securities or other financial instruments in this or in any other jurisdiction in which such solicitation or offer would be unlawful under the securities laws of such jurisdiction.

Eva Fox holds zero shares of Tesla, Inc., and currently (at the time of this article's publishing) holds zero options or securities in Tesla Inc. and/or its affiliates.