Tesla’s delivery challenges weigh on revenue

Tesla’s revenue fell short of Wall Street expectations in the latest quarter as it struggled to deliver vehicles to customers because of transport problems, according to figures released on Wednesday.

Earnings per share of $1.05 came in above market forecasts of 99 cents, with higher selling prices helping to offset the shortfall in deliveries as well as the higher cost of materials and expenses from increasing production at two new plants.

Tesla was able to hold its closely watched gross profit margin from automotive operations at 27.9 per cent, the same as the preceding three months, though it was down 2.5 percentage points from the year before as it grappled with the new plant costs.

Revenue rose to $21.45bn, 56 per cent higher than the year before. Wall Street had been expecting earnings of 99 cents per share on revenue of just under $22bn.

Tesla shares fell about 4 per cent in after-hours trading following the earnings release.

The company has blamed its failure to hit ambitious delivery targets this year on a series of operational challenges, ranging from Covid-related production shutdowns in China to supply chain pressures. However, analysts have started to warn of possible erosion in demand, as competition from other carmakers has increased and macroeconomic conditions have worsened. The company did not comment on demand in its official earnings statement, which was released ahead of a call with analysts later in the day.

Tesla’s shares have fallen 17 per cent since the beginning of October, when it blamed transport and delivery problems for third-quarter deliveries that fell about 20,000 short of investors’ expectations.

At the start of the year, chief executive Elon Musk predicted Tesla’s deliveries would “comfortably” beat its average annual growth target of 50 per cent, even though supply chain problems were already piling up. To hit that target after the recent shortfalls, deliveries would have to reach nearly 500,000 in the final three months of this year, 45 per cent more than its previous record quarterly delivery number.