Tesla’s delivery challenges weigh on revenue

Tesla’s revenue fell short of Wall Street expectations last quarter as it struggled to deliver vehicles to customers due to transportation issues, figures showed Wednesday.

Earnings per share of $1.05 were 99 cents higher than the market forecast, with higher selling prices helping to offset the lack of shipments as well as higher material costs and expenses resulting from higher production in two new factories.

Tesla was able to maintain its closely watched gross profit margin from the automotive business at 27.9%, similar to the previous three months, although it fell 2.5 percentage points from a year earlier as she was struggling with the costs of the new factory.

Revenue reached $21.45 billion, or 56% more than the previous year. Wall Street was expecting earnings of 99 cents a share on revenue of just under $22 billion.

Tesla shares fell about 4% in after-hours trading after the earnings release.

The company blamed its failure to meet ambitious delivery targets this year on a range of operational challenges, ranging from Covid-related production shutdowns in China to supply chain pressures. However, analysts have begun to warn of a possible erosion of demand as competition from other automakers intensifies and macroeconomic conditions deteriorate. The company did not comment on the request in its official earnings release, which was released ahead of a call with analysts later in the day.

Tesla shares have fallen 17% since the start of October, when it blamed transportation and delivery issues on third-quarter shipments that were about 20,000 below investor expectations.

Earlier this year, Chief Executive Elon Musk predicted Tesla’s shipments would “comfortably” exceed its average annual growth target of 50%, even as supply chain issues were already piling up. To hit that target after recent shortages, shipments would need to hit nearly 500,000 in the last three months of this year, 45% above its previous record for quarterly shipments.

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