Tesla expects no deliveries in 2022, Q3 revenue misses expectations

Oct 19 (Reuters) – Tesla Inc (TSLA.O) Chief Executive Elon Musk said on Wednesday he did not expect the company to hit its vehicle delivery target this year, but played down concerns after the company’s revenue fell short of Wall Street expectations. Concerns about weak demand.

The billionaire told analysts on a conference call that demand was strong in the fourth quarter, addressing investor concerns that a weakening global economy and high prices for Tesla vehicles could hit buyers.

But he said some logistical challenges will persist, with deliveries rising below 50% in the fourth quarter, while production growth hit 50%.

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“I wouldn’t say we’re recession proof, but it’s certainly recession resilient,” he said.

Shares were down 4.3% in after-hours trading.

Tesla is expanding rapidly despite global economic turmoil, and investors are closely watching for signs that a cooling economy will hurt demand.

The company’s third-quarter automotive gross margin was 27.9%, below analysts’ expectations and down from 30.5% a year earlier.

Tesla’s third-quarter revenue of $21.45 billion was a record high but missed analysts’ expectations of $21.96 billion, according to IBES data from Refinitiv.

The company said its earnings had a negative foreign exchange impact of $250 million as the dollar strengthened against major currencies.

According to Tesla’s statement, “Rising raw material costs have impacted our profitability, as well as inefficiencies in our new plants in Berlin and Texas, as well as our new 4680 cells.” Musk added that production of 4680 cells is gaining momentum, although executive Andrew Baglino said, “We haven’t overcome the challenges ahead. There’s no doubt about it.”

Musk also said the company has the ability to make $5 billion to $10 billion in share repurchases pending board review and approval.

Paths to Apple’s Market Share

Earlier this month, Tesla said it delivered 35% more cars between July and September from the previous quarter, but the record number fell short of vehicle production and analysts’ estimates.

Shares in the electric-car pioneer have fallen about 50 percent from a record high in November as investors panic over a cooling global economy and Musk’s bid to buy social media company Twitter (TWTR.N).

Musk said on the conference call that he thinks Tesla will be worth more than Apple Inc (AAPL.O) and Saudi Aramco (2222.SE) combined. Tesla’s market cap is now less than $700 billion, compared with Apple’s $2.3 trillion and oil producer Saudi Aramco’s $2.1 trillion.

Analysts had expected Musk to express optimism about Tesla on the conference call. Musk has been struggling to raise cash to fund his $44 billion deal to take Twitter private. Some experts say Musk may need to sell about another $3 billion in stock to fund the deal after the earnings report.

Musk said on Wednesday he was excited about an imminent acquisition of Twitter Inc (TWTR.N) even though he and other investors overpaid for the social media company.

Musk also said that Tesla’s Cybertruck pickup truck is expected to enter production by the middle of next year, its heavy-duty semi truck will begin deliveries later this year, and sales in North America could reach 50,000 by 2024.

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Reporting by Akash Sriram in Bengaluru and Hyunjoo Jin and Noel Randewich in San Francisco; Editing by David Gregorio, Peter Henderson and Chris Reese

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