Tesla posts best quarterly revenue ever in last quarter with EV tax credit

The last quarter with the US government’s EV tax credit was a serious boon for Tesla.

The company posted its highest quarterly revenue ever, at $28.1 billion in the third quarter, coming in well ahead of Wall Street’s expectation of $25.3 billion. Earnings were $0.50, matching analysts’ forecast of $0.50.

The latest earnings come after Tesla sold a record number of vehicles in the third quarter, helped by customers who flocked to buy EVs en masse to take advantage of the $7,500 tax credits before they expired.

Tesla accomplished the feat of record sales by offering huge discounts that ate into its profit margins.

Its automotive gross margin excluding revenue credits was 15.4% last quarter, down from 17.1% a year earlier. That number was nearly 30% for the third quarter of 2021.

As a countermeasure to the end of the government’s tax credit, Tesla earlier this month unveiled its long-awaited more affordable vehicles, in the form of lower-trim versions of its Model 3 and Model Y. These “Standard” models cost about $5,000 less than previous versions but also have a lot fewer features, with the intention of increasing sales volume as a way to drive overall revenue, though it’s likely that could eat into earnings.

The Takeaway

This was a transitional quarter in a transitional year of a transitional era for Tesla. Quarterly, the company was really trying to roll as many cars off the lot as possible before losing a valuable incentive. This year has also held big launches of the nascent robotaxi product that many see as the future of the automaker. And more broadly, Tesla is calling for a transition to a business where that robotaxi expansion and the Optimus robot development become where most of the company’s value lies.