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Tesla beats on revenue, misses on Model 3 production, stumbles to reduce losses

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Tesla released its third quarter 2017 earnings after the closing bell on Wednesday, summarized in the Q3’17 Update Letter. The results beat Wall Street’s revenue expectations and missed on bottom line. The company posted third-quarter earnings loss of $2.92 per share, representing a wider loss than analyst estimates of a $2.27 per share loss. Revenue was $2.98 billion versus an estimate of $2.92 billion.

REVENUE

The company’s revenue consisted of $2.36B in automotive revenue, $317.5M in energy generation and storage, and $304M in service and other revenue. Automotive revenue increased 3.33% over the second quarter, while energy generation and storage grew 10.7%. Automotive revenue primarily grew from the 4.5% sequential increase in Model S and X deliveries. Tesla attributed the gains in energy generation and storage to their south Australia battery storage project.

The company deployed 109 MW of energy generation products and 100MWh of energy storage products in Q3. This is a sequential increase of 12% over Q2 and 138% increase year-over-year. Tesla also stated that now 46% of residential solar installations were sold rather than leased, this is compared to just 13% of all residential solar in Q3 2016.

MODEL 3

Tesla delivered 222 Model 3s in the third quarter, representing a fraction of the total amount of the company’s deliveries and revenue. Tesla did not disclose in its Q3 letter the number of Model 3 units produced in the fourth quarter thus far, but did identify Model 3’s production bottlenecks to be that of the battery module line at Gigafactory 1. Tesla notes that the company decided to take over an automated process related to production of Model 3’s battery module from a ‘manufacturing systems supplier’ and redesign the process in-house. “We are confident that throughput will increase substantially in upcoming weeks and ultimately be capable of production rates significantly greater than the original specification.” read Tesla’s update letter.

Tesla also included a  video of the Model 3 being worked on in general assembly.

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GUIDANCE FOR END OF 2017

While Tesla expects the Model 3 to have a break-even gross margin in Q4, then go on to “improve rapidly” to their target of 25% in 2018. The company previously expected the Model 3 to carry a positive gross margin in Q4, but production “bottlenecks” pushed back that goal. In Q4 the overall non-GAAP automotive gross margin is expected to drop to 15%, compared to 18.7% in Q3.

Tesla expects to produce a total of 100,000 Model S and X vehicles this year and expects to reach a production level of 5000 Model 3 vehicles per week will at the end of Q1 2018.

Tesla has just over $3.53B in cash at the end of the quarter, up nearly $137M from Q2. This includes the $1.8B the company raised through a debt offering in August. The company expects to spend roughly $1B on capital expenditures in Q4, compared to $1.1B in Q3.

Today’s session ended up closing down at a 3.15% a loss and down another 4.07% in after-hours. Looking at the after-hours trading action after the close, the initial reaction to the numbers for Q3 2017 is quite negative, with the stock dropping to $308. Still, Tesla stock is up 50% in 2017 and nearly 70% in the past 12 months.

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The full Q3 letter can be found here.

Christian Prenzler is currently the VP of Business Development at Teslarati, leading strategic partnerships, content development, email newsletters, and subscription programs. Additionally, Christian thoroughly enjoys investigating pivotal moments in the emerging mobility sector and sharing these stories with Teslarati's readers. He has been closely following and writing on Tesla and disruptive technology for over seven years. You can contact Christian here: christian@teslarati.com

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Investor's Corner

Tesla could save $2.5B by replacing 10% of staff with Optimus: Morgan Stanley

Jonas assigned each robot a net present value (NPV) of $200,000.

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Credit: Tesla Optimus/X

Tesla’s (NASDAQ:TSLA) near-term outlook may be clouded by political controversies and regulatory headwinds, but Morgan Stanley analyst Adam Jonas sees a glimmer of opportunity for the electric vehicle maker. 

In a new note, the Morgan Stanley analyst estimated that Tesla could save $2.5 billion by replacing just 10% of its workforce with its Optimus robots, assigning each robot a net present value (NPV) of $200,000.

Morgan Stanley highlights Optimus’ savings potential

Jonas highlighted the potential savings on Tesla’s workforce of 125,665 employees in his note, suggesting that the utilization of Optimus robots could significantly reduce labor costs. The analyst’s note arrived shortly after Tesla reported Q2 2025 deliveries of 384,122 vehicles, which came close to Morgan Stanley’s estimate and slightly under the consensus of 385,086.

“Tesla has 125,665 employees worldwide (year-end 2024). On our calculations, a 10% substitution to humanoid at approximately ($200k NPV/humanoid) could be worth approximately $2.5bn,” Jonas wrote, as noted by Street Insider.

Jonas also issued some caution on Tesla Energy, whose battery storage deployments were flat year over year at 9.6 GWh. Morgan Stanley had expected Tesla Energy to post battery storage deployments of 14 GWh in the second quarter.

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Musk’s political ambitions

The backdrop to Jonas’ note included Elon Musk’s involvement in U.S. politics. The Tesla CEO recently floated the idea of launching a new political party, following a poll on X that showed support for the idea. Though a widely circulated FEC filing was labeled false by Musk, the CEO does seem intent on establishing a third political party in the United States. 

Jonas cautioned that Musk’s political efforts could divert attention and resources from Tesla’s core operations, adding near-term pressure on TSLA stock. “We believe investors should be prepared for further devotion of resources (financial, time/attention) in the direction of Mr. Musk’s political priorities which may add further near-term pressure to TSLA shares,” Jonas stated.

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Two Tesla bulls share differing insights on Elon Musk, the Board, and politics

Two noted Tesla bulls have shared differing views on the recent activities of CEO Elon Musk and the company’s leadership.

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Credit: Tesla

Two noted Tesla (NASDAQ:TSLA) bulls have shared differing views on the recent activities of CEO Elon Musk and the company’s leadership.

While Wedbush analyst Dan Ives called on Tesla’s board to take concrete steps to ensure Musk remains focused on the EV maker, longtime Tesla supporter Cathie Wood of Ark Invest reaffirmed her confidence in the CEO and the company’s leadership.

Ives warns of distraction risk amid crucial growth phase

In a recent note, Ives stated that Tesla is at a critical point in its history, as the company is transitioning from an EV maker towards an entity that is more focused on autonomous driving and robotics. He then noted that the Board of Directors should “act now” and establish formal boundaries around Musk’s political activities, which could be a headwind on TSLA stock. 

Ives laid out a three-point plan that he believes could ensure that the electric vehicle maker is led with proper leadership until the end of the decade. First off, the analyst noted that a new “incentive-driven pay package for Musk as CEO that increases his ownership of Tesla up to ~25% voting power” is necessary. He also stated that the Board should establish clear guidelines for how much time Musk must devote to Tesla operations in order to receive his compensation, and a dedicated oversight committee must be formed to monitor the CEO’s political activities.

Ives, however, highlighted that Tesla should move forward with Musk at its helm. “We urge the Board to act now and move the Tesla story forward with Musk as CEO,” he wrote, reiterating its Outperform rating on Tesla stock and $500 per share price target.

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Tesla CEO Elon Musk has responded to Ives’ suggestions with a brief comment on X. “Shut up, Dan,” Musk wrote.

Cathie Wood reiterates trust in Musk and Tesla board

Meanwhile, Ark Investment Management founder Cathie Wood expressed little concern over Musk’s latest controversies. In an interview with Bloomberg Television, Wood said, “We do trust the board and the board’s instincts here and we stay out of politics.” She also noted that Ark has navigated Musk-related headlines since it first invested in Tesla.

Wood also pointed to Musk’s recent move to oversee Tesla’s sales operations in the U.S. and Europe as evidence of his renewed focus in the electric vehicle maker. “When he puts his mind on something, he usually gets the job done,” she said. “So I think he’s much less distracted now than he was, let’s say, in the White House 24/7,” she said.

TSLA stock is down roughly 25% year-to-date but has gained about 19% over the past 12 months, as noted in a StocksTwits report.

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Cantor Fitzgerald maintains Tesla (TSLA) ‘Overweight’ rating amid Q2 2025 deliveries

Cantor Fitzgerald is holding firm on its bullish stance for the electric vehicle maker.

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Credit: Tesla China

Cantor Fitzgerald is holding firm on its bullish stance for Tesla (NASDAQ: TSLA), reiterating its “Overweight” rating and $355 price target amidst the company’s release of its Q2 2025 vehicle delivery and production report. 

Tesla delivered 384,122 vehicles in Q2 2025, falling below last year’s Q2 figure of 443,956 units. Despite softer demand in some countries in Europe and ongoing controversies surrounding CEO Elon Musk, the firm maintained its view that Tesla is a long-term growth story in the EV sector.

Tesla’s Q2 results

Among the 384,122 vehicles that Tesla delivered in the second quarter, 373,728 were Model 3 and Model Y. The remaining 10,394 units were attributed to the Model S, Model X, and Cybertruck. Production was largely flat year-over-year at 410,244 units.

In the energy division, Tesla deployed 9.6 GWh of energy storage in Q2, which was above last year’s 9.4 GWh. Overall, Tesla continues to hold a strong position with $95.7 billion in trailing twelve-month revenue and a 17.7% gross margin, as noted in a report from Investing.com.

Tesla’s stock is still volatile

Tesla’s market cap fell to $941 billion on Monday amid volatility that was likely caused in no small part by CEO Elon Musk’s political posts on X over the weekend. Musk has announced that he is forming the America Party to serve as a third option for voters in the United States, a decision that has earned the ire of U.S. President Donald Trump. 

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Despite Musk’s controversial nature, some analysts remain bullish on TSLA stock. Apart from Cantor Fitzgerald, Canaccord Genuity also reiterated its “Buy” rating on Tesla shares, with the firm highlighting the company’s positive Q2 vehicle deliveries, which exceeded its expectations by 24,000 units. Cannacord also noted that Tesla remains strong in several markets despite its year-over-year decline in deliveries.

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