New York (AFP) – Tesla reported a drop in third-quarter profits Wednesday but topped analyst estimates as multi-billionaire Elon Musk’s electric vehicle maker invested heavily in new technologies. Texas-based Tesla reported profits of $787 million, down 42.7 percent from the year-ago period. Besides marginally lower car sales, Tesla saw a drop in revenues from regulatory credits and energy and storage, while spending on research and development jumped. Revenues were essentially flat at $28 billion.
“We continue to invest in the future through R&D and Capex spend across our businesses, including SI, robotics and energy,” said Tesla, referring to the Trump administration’s favored term, “Super Intelligence” instead of artificial intelligence. “Much hard work lies ahead, but we are as optimistic as ever,” the company added in the earnings release.
The results follow Musk’s disclosure Tuesday that special committees of independent directors at both SpaceX and Tesla have been set up to discuss a merger of the two companies. Analysts had been cautious about Tesla’s third-quarter financial performance heading into Wednesday’s release. While third-quarter auto sales topped estimates due in part to an uptick in European markets amid high gasoline prices, better sales have not always translated into a lift into Tesla’s bottom line.
Also impactful, capital spending more than doubled to $4.7 billion. The company has also faced questions about the rollout of Tesla’s robotaxi venture that has progressed much more slowly than hoped. Musk has repeatedly made overly rosy forecasts about self-driving technology, as in 2019 when he predicted there would be more than a million robotaxis the following year. In Texas, where Tesla has focused its robotaxi launch, there are currently about 800 robotaxis, according to FSD Database.
Tesla’s release highlighted the September 3 launch of robotaxi service in Austin and said “cumulative unsupervised Robotaxi miles grew eightfold quarter over quarter.” For much of this year, Tesla has also encountered scrutiny over a steep increase in annual capital spending to $25 billion or more to fund ambitious programs in artificial intelligence, robotics and autonomous driving.
Capital spending more than doubled in the third quarter to $4.7 billion.
– Looming SpaceX merger? –
But such questions have been upstaged by the prospects of a merger between the two Musk businesses, which have a combined equity value of more than $3.5 trillion. “We think it’s a matter of when, not if” the two companies combine, said CFRA Research equity analyst Garrett Nelson. “That’s the whole issue,” Nelson said of a potential mega-deal. “Tesla as we know it today may not exist in six to 12 months.”
On SpaceX’s conference call Tuesday night, Musk said the committees have not agreed on the terms of any deal and there is no guarantee they will. Musk said the two companies could gain from working together on AI software, chip design, robotics and space-based computing.
Talk of the deal heaps additional attention on Musk as the billionaire’s latest cash infusion into US political elections fuels fresh criticism. Musk has steered at least $276 million to allies of President Donald Trump in the Republican party. Musk is also under scrutiny over a report he ordered a reduction in Starshield telecom services for Ukraine, adding to pressure on the country at the same time Trump has criticized Ukrainian President Volodymyr Zelensky and called for him to be replaced.
Shares of Tesla rose 1.4 percent in after-hours trading.
© 2024 AFP
