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Tesla is slated to report its third-quarter (Q3) results, and expectations in the market are positive. The quarterly performance boom is also in part due to a last-minute buying spree by US customers who wanted to order electric vehicles before the $7,500 federal EV tax credit ran out.
Analysts think the emphasis will spread beyond the top-line numbers to CEO Elon Musk's views on trends in demand, pricing tactics, and the company's changing product mix.
To lure new purchasers and compensate for prospective post-incentive demand declines, Tesla has just released cheaper ‘Standard’ versions of its Model 3 and Model Y. The models are about $5,000-$5,500 less expensive than before, with smaller batteries, weaker motors, and fewer niceties. Tesla also cut lease prices temporarily on high-end trims to keep pace with increasing global competition.
Though these actions have expanded Tesla's customer base, they have also compressed profit margins. The company's automotive gross margin, excluding regulatory credits, is estimated by analysts to be approximately 15.6%, a decline from 17.05% last year, as per Visible Alpha data.
Tesla is likely to post quarterly revenues of $26.24 billion, up 4.2% year-on-year, according to LSEG data. Although the top-line growth is consistent, investor enthusiasm is tempered by margin squeeze and decelerating worldwide EV demand.
Tesla's sales are likely to fall around 8.5% this year, under pressure from increasing competition and fears over Musk's political statements.
Musk's report on Tesla's much-awaited robotaxi plan is likely to be one of the key points of discussion during the earnings call. The CEO has already asserted that Tesla's robotaxi fleet may operate for half the US population by the end of the year.
Cantor Fitzgerald analysts pointed out that investors are looking for definitive numbers on fleet size, geography coverage, and roll-out schedules for the years up to 2026. Investors are interested in knowing if Musk can maintain growth momentum and hold off profitability in an increasingly competitive EV environment.
Also Read: Tesla Stock at $435: Can Q3 Earnings Propel It Past the $450 Resistance Level?
