Investor's Corner
Tesla’s Q3 2018 earnings call: What we expect to see
In a rather surprising announcement on Monday, Tesla revealed that it was releasing its Q3 2018 earnings report after the closing bell on Wednesday. The earlier-than-expected earnings call appears to have fostered positive sentiments among the company’s investors, and coupled with a change of heart from a staunch TSLA short-seller, Tesla stock (NASDAQ:TSLA) saw a 12.72% rise on Tuesday, bringing the company within reach of the $300-per-share-mark once more.
While Tesla was able to hit its production and delivery targets in Q3, questions remain about whether the company was able to turn a profit as promised by CEO Elon Musk. That said, Wall Street analysts polled by FactSet expect Tesla to post revenue of $6.05 billion and a GAAP EPS of -$0.95, partly due to a major increase in Model 3 deliveries in the third quarter. Non-GAAP EPS consensus is a more favorable -$0.03.
With these in mind, here are some pertinent updates and information we are expecting to see in Tesla’s Q3 2018 earnings call.
Profitability and Cash-Flow Updates
Earlier this year, Elon Musk boldly declared that Tesla would be profitable and cash-flow positive in the second half of the year. The company went through great lengths in its efforts to achieve this ambitious target, from laying off 9% of its employees last June to allowing owners to help out the company deliver as many vehicles as possible in the final weeks of the third quarter.
Wall Street analysts polled by FactSet expect the company to report a modest amount of positive free cash flow for the third and fourth quarter. Non-GAAP EPS is also expected to improve to $0.78 in Q4. In the upcoming earnings call, Tesla would likely offer some updates on its profit outlook in its shareholder letter.
Model 3 Production and Margins
In Tesla’s Q2 shareholder letter, the company stated that it is aiming to grow Model 3 production to 10,000 units per week as soon as it can. Tesla also aimed to produce the Model 3 at a rate of 6,000 per week by late August — a goal that the company was unable to attain. In today’s earnings call, Tesla is expected to provide an updated guidance for the Model 3 ramp.
Back in August, Tesla noted that it expects Model 3 gross margins (GM) to improve to 15% and 20% in Q4. These figures are a bit more conservative than Tesla’s initial forecasts for the vehicle, which estimated gross margins to be at 25% when production is stabilized at 5,000 units per week. The upcoming earnings call should provide some guidance as to where the Model 3’s gross margins are at this point, and where it could be at the end of Q4.
The $35,000 base Model 3 and the Model Y
Tesla has pretty much hit its stride with the production of the Long Range RWD, Dual Motor AWD, and Dual Motor Performance Model 3. Earlier this month, the company also revealed the Mid Range RWD Model 3, a vehicle that places the electric car’s price closer to Elon Musk’s $35,000 starting price for the electric sedan. Considering that the company has left its self-imposed production hell, the time might be right for Tesla to provide some updated guidance as to when the long-promised $35,000 Model 3 would enter production.
Updates on other upcoming vehicles are also expected, particularly the next car in the company’s lineup — the Model Y. Considering that Elon Musk has teased an unveiling sometime early next year for the crossover SUV, there is a good chance that the upcoming Q3 2018 earnings call would provide a more concrete date for the highly-anticipated vehicle’s unveiling.
Tesla Energy Updates
Tesla Energy does not attract as many headlines as the company’s electric car business. Despite this, the company’s executives including CEO Elon Musk and CTO JB Straubel have both noted that Tesla’s energy storage business would likely match the company’s electric car division in the near future. This was highlighted recently by legendary investor Ron Baron, who stated that Tesla could become a $1 trillion company by 2030, comprised of a $500 billion electric car division and a $500 billion battery storage business.
Wall Street analysts’ consensus for Tesla Energy estimates the business to post revenue of $377 million (up 19%), and a gross profit of just $20 million. Announcements on upcoming battery storage projects are also expected to be discussed in the upcoming call.
Tesla’s New Chairman
As part of his settlement with the Securities and Exchange Commission, Elon Musk agreed to step down as Tesla’s Chairman. Reports eventually emerged that board member James Murdoch was in line to take on Musk’s role. These reports were eventually debunked by Elon Musk himself on Twitter, though, leaving Tesla’s next chairman still a large question mark.
On Wednesday’s earnings call, expectations are high that the company would provide some updates on its search for a new Chairman to replace Elon Musk. Other terms of the CEO’s settlement with the SEC, particularly the addition of two new independent board members, would likely be discussed as well.
Tesla’s Q3 Update letter would be posted on Tesla’s Investor Relations website after markets close today. At 3:30 pm Pacific Time (6:30 pm Eastern Time), Tesla would start its Q3 earnings call.
Investor's Corner
Tesla and SpaceX take “Terafab” Trademark fight to Federal Court
Tesla and SpaceX sue a small Illinois firm after cease and desist letters over Terafab.
Tesla and SpaceX are asking a federal judge to rule that their planned Terafab chip factory does not infringe a small Illinois company’s trademark, a request that arrives only after months of quiet negotiation broke down this summer.
The dispute traces to May 18, when Tesla filed three U.S. trademark applications for “Terafab” and “Tesla Terafab,” covering semiconductor chips and related chip making services. TERA-print LLC, a nanotechnology company that has held a federal trademark for “Tera-Fab” since 2021, responded five days later with a cease and desist letter. According to the lawsuit, first reported by Reuters, TERA-print argued that Tesla and SpaceX’s use of “Terafab” would confuse consumers familiar with its own trademark, which covers a desktop photolithography printer sold to researchers for sensor and bioengineering work.
What stands out in the filing is the timing of TERA-print’s own paperwork. One day before sending that cease and desist letter, on May 22, TERA-print applied to expand its existing registration to cover semiconductor materials, silicon chips, nanoelectronic devices and AI design services, categories it had not previously claimed. Tesla and SpaceX call that filing opportunistic in their complaint, noting it arrived two months after Tesla’s public Terafab announcement and just days after Tesla’s own trademark applications went in.
Elon Musk launches TERAFAB: The $25B Tesla-SpaceXAI chip factory that will rewire the AI industry
By June 10, TERA-print was threatening to sue for federal trademark infringement, false designation of origin and unfair competition, the complaint states. Rather than wait to be sued, Tesla, SpaceX and SpaceXAI met with TERA-print six separate times between June and August trying to resolve the dispute directly. Those talks collapsed, and the companies filed for declaratory judgment this week in the U.S. District Court for the Western District of Texas, asking a judge to find that “Terafab” does not infringe TERA-print’s mark before TERA-print can file a claim of its own.
TERA-print isn’t backing down. The company told PCMag it discussed a settlement with Tesla as recently as September 2 and feels misled by what it called Tesla’s professed interest in settling. Its CTO, Andrey Ivankin, said TERA-print holds a Defense Department contract to fabricate semiconductors and partially owns Mattiq Inc., an AI company built on TERA-print’s products, and that the company will vigorously defend its rights.
Tesla and SpaceX argue the overlap is superficial. Terafab is planned as a $16.8 billion complex spanning roughly 100 million square feet at the Grimes County site SpaceX confirmed last month, built to produce chips for Optimus robots, Tesla’s AI computing needs and SpaceX’s orbital data center ambitions, a scale and purpose the companies say no reasonable consumer would confuse with a tabletop lab printer. TERA-print’s product line has stayed focused on lithography tools for biological and sensor research since it registered its mark in 2021.
The trademark fight is the second legal dispute tied to the Terafab project in the past week, following a separate SpaceX suit aimed at keeping company records about the facility out of public view, as KBTX reported. Whether construction proceeds under the Terafab name now depends on a federal judge in Austin.
In a new interview on Wednesday, Tesla uber bull Ron Baron said that anyone looking to buy the company’s stock should do so as soon as they can.
Baron, founder and CEO of Baron Capital and one of Tesla’s most persistent institutional bulls, used a CNBC Squawk Box appearance on Wednesday to deliver a familiar message with fresh urgency: In his opinion, Tesla stock is a buy:
“The time to buy the stock is now. FSD is catching on, and it’s going to be bigger and bigger. 55% of new buyers are buying it (Teslas) with FSD. It’s going to be everywhere. It’s safer.”
The Baron Capital frontman’s case is built around Full Self-Driving. Tesla reported 1.48 million active FSD subscriptions in the second quarter, up 56 percent year over year, and company officials have said roughly 55 percent of new North American deliveries left with a subscription enabled.
Baron framed that attach rate as proof the product is moving from enthusiast extra to default expectation, and as a reason software, not just vehicle volume, should drive the next phase of value.
His conviction on Tesla shares is not theoretical, as Baron Capital made its first Tesla investment in 2014, after years of meetings that began around the 2010 IPO roadshow. The firm later built a large SpaceX position starting in 2017.
Ron Baron today in new interview on Tesla:
“The time to buy the stock is now. FSD is catching on, and it’s going to be bigger and bigger. 55% of new buyers are buying it (Teslas) with FSD. It’s going to be everywhere. It’s safer.” pic.twitter.com/Rv5PB0bVZ2
— Sawyer Merritt (@SawyerMerritt) September 16, 2026
Baron said those Musk-led bets have generated about $30 billion of the $71 billion in profits Baron Capital has produced for clients. He put the firm’s current exposure at roughly $25 billion in SpaceX and $5 billion in Tesla. Personally, he described SpaceX as his largest holding, at about $5 billion, with about $1.5 billion in Tesla and additional Tesla exposure through the firm’s funds.
That concentration is also a statement of loyalty. Asked about talk of a SpaceX-Tesla combination, Baron said he had already walked Elon Musk through arguments for and against a deal, then declined to repeat them on air. His public position was simpler: “Whatever you decide is better is what I’m going to support,” he said to Musk.
Baron also said that he picked up the farewell edition of the Model S after Tesla decided to sunset the vehicle earlier this year, calling it his favorite car he’s ever driven.
Elon Musk
Elon Musk gives his most telling Tesla-SpaceX merger conversation yet
Elon Musk hinted a Tesla-SpaceX merger could be coming, and Wall Street is taking notice.
Elon Musk gave his clearest signal yet that Tesla and SpaceX could eventually combine, telling the All-In Summit in Los Angeles that the two companies’ deepening collaboration makes the question worth asking. Sawyer Merritt first surfaced the highlight on X Tuesday.
Asked directly why Tesla and SpaceX remain separate given how closely they already work together, Musk told hosts at the summit: “Great question there. With all this collaboration, on so many levels, who can imagine what action one might take when there’s so much close collaboration in so many areas.” SpaceX President Gwynne Shotwell, who joined Musk on stage, added that SpaceX personnel have already moved into xAI to fill leadership and engineering gaps, saying the businesses are integrating “faster than I thought,” though “not fully integrated yet,”
The comments landed on top of merger speculation that has been building on Wall Street for months. JPMorgan has called a tie-up “strategically coherent on paper,” pointing to overlapping ambitions in AI, robotics, energy, transportation and space. Jefferies went further, estimating Musk could retain roughly 55.3 percent voting control in a deal structured without a premium, a scenario that would still leave room for Tesla shareholders to come out ahead. On Kalshi, traders now put the odds of a merger before 2028 at 66 percent.
Tesla’s stake in SpaceX, still under one percent, traces back to its earlier investment in xAI, which converted to SpaceX equity after SpaceX absorbed the AI company. The two are also jointly building Terafab, a chip facility in Austin meant to serve both Tesla’s AI computing needs and SpaceX’s satellite ambitions. Wedbush analyst Dan Ives has stood by a 2027 merger timeline for months, and Cathie Wood’s ARK Invest recently floated a similar case, an idea Musk pushed back on directly at the time.
Another Tesla SpaceX merger prediction by ARK Invest has Elon Musk talking
The timing adds another layer. Tesla has scheduled an October 1 unveiling for its next generation Roadster at a venue near SpaceX’s McGregor, Texas test site, using the phrase “Go for launch” in its promotional material. Both stocks dipped roughly 2 percent Monday before recovering slightly in premarket trading Tuesday, with SpaceX shares up about 0.4 percent and Tesla essentially flat.
Musk stopped short of confirming anything is in motion. But unlike his past denials of a corporate restructuring, this response didn’t rule one out, and it came with Shotwell sitting next to him describing an integration that’s already underway.
Tesla and SpaceX take “Terafab” Trademark fight to Federal Court
NHTSA just escalated its Tesla Cybercab investigation in a big way
