Tesla Set to Report Third-Quarter Earnings as Growth Concerns Emerge

Tesla, after the market’s close on Wednesday, is expected to report quarterly revenue topping $22 billion, its highest ever, up from around $13.8 billion in last year’s third quarter, according to FactSet. 

However, in the face of rising interest rates and recession fears, Wall Street has grown more pessimistic about Tesla’s ability to deliver the more than 1.4 million vehicles it needs to hit its 2022 target of boosting output by 50%. 

To meet that goal, Tesla would have to deliver nearly a half million EVs to customers in the final three months of the year. That would mark a 42% increase from the third quarter, when Tesla put nearly 344,000 vehicles in customers’ hands, a company record. Tesla didn’t respond to a request for comment.

Tesla’s stock price has fallen by around 37% in 2022 through Tuesday, eclipsing the roughly 31% decline in the tech-heavy Nasdaq Composite, as the company has navigated production hiccups and ongoing supply-chain challenges. Mr. Musk’s on-again, off-again pursuit of Twitter Inc. also has weighed on the car maker’s stock. 

Mr. Musk, Tesla’s chief executive and largest shareholder, has sold more than $15 billion worth of Tesla stock this year, indicating that at least some of the proceeds would be used to finance his $44 billion deal for Twitter. Some investors have worried that he may need to sell more to close the transaction. Mr. Musk has said after recent sales that he didn’t intend to sell more Tesla stock. 

The billionaire entrepreneur plans to make an appearance on Wednesday’s conference call with analysts, he said this week.

Tesla has repeatedly raised prices for its vehicles as parts have become more expensive and new cars difficult to come by due to supply-chain bottlenecks. Tesla cars sold for an average of around $57,000 in the third quarter, up from about $49,000 a year earlier, analysts surveyed by FactSet estimated, likely lifting the company’s bottom line and mitigating the lower-than-expected deliveries of the past three months. 

Tesla said changes to its production and distribution practices led to more cars being in transit at the end of the quarter. 

Still, the deliveries result, paired with declining wait times for new vehicles and global economic turmoil, has sparked concern about whether demand for Teslas may be weakening. 

“We could be seeing the early signs of a demand issue but monthly registrations and 4Q results will need to be monitored to better assess the situation,” Cowen analysts wrote in a recent note to investors, expressing concern in particular about consumer appetite in China.

Customers in China ordering a new Model 3 in September could expect to wait about four or five weeks to receive their car, down from around 18 weeks in July, according to Bernstein Research. 

Wait times also have declined for Tesla’s most popular models in the U.S., where the average interest rate on a new-car loan reached 5.7% in the third quarter, up from 4.3% a year earlier, according to Edmunds.com. Higher rates make it more expensive to finance a car purchase. 

Mr. Musk said in July he hoped Tesla would be able to lower vehicle prices, which he said were at “embarrassing levels.” “You cannot just raise prices to some arbitrarily high level, because you pass the affordability boundary and then demand falls off a cliff,” he said. 

Tesla, racing to meet its growth goal, plans to deliver its first electric semitrailer trucks in December, three years later than initially planned, to food and beverage maker

PepsiCo Inc.

If the company meets its latest timeline, the truck would be the first new model Tesla is putting in customer hands since it rolled out the Model Y compact sport-utility vehicle in early 2020. 

President Biden in August signed into law legislation creating a new tax credit of up to $40,000 for commercial electric vehicles, available beginning in 2023. That law also opens the door for Tesla’s passenger vehicles to once again qualify for a $7,500 consumer tax break, also beginning next year. Teslas qualified early on for such a credit, before the company hit a sales cap. 

Mr. Musk has said he expects the long-awaited Cybertruck pickup to enter production next year.

Write to Rebecca Elliott at [email protected]