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As Tesla quickly ramps up the manufacture of its electric cars, supply shortages, logistics bottlenecks, and escalating costs are affecting the company.
According to Tesla’s financial statement for investors, despite recent improvements, the issues still present a serious challenge.
Sales of cars fell short of forecasts, resulting in lower revenue than anticipated for the three months ending in September.
However, it was still more than 50% greater than a year earlier at $21.45 billion (£19.12 billion).
Elon Musk, a multibillionaire, has been driving Tesla’s ambitious growth in recent years by constructing new plants in the US, China, and Germany and increasing production.
The company delivered 343,000 cars in the quarter, setting a record and outpacing the previous quarter by more than 40%.
There are concerns that the market may be declining because the company built more cars than were sold. Additionally, the primary China market’s substantial economic slowdown, rising borrowing costs, and rising prices deter buyers.
While acknowledging China’s downturn, Mr. Musk rejected claims that demand was slowing down.
Tesla stated that the discrepancy was brought on by problems in locating vehicles to deliver cars to clients when it disclosed the delivery data earlier this month.
The company said that much-anticipated deliveries of its electric trucks would begin in December. Profit for the corporation was $3.3 billion, a considerable increase over the previous year.
However, concerns regarding Tesla’s future growth and Mr. Musk’s massive stock sales as he prepares to buy out Twitter for $44 billion have recently weighed on the stock price.
This year, the share price has fallen by 40%, erasing billions of dollars from the company’s value. In Wednesday’s after-hours trade, its shares decreased by an additional 4%.
Tesla no longer dominates the market
According to Sarah Kunst, managing director of Cleo Capital, Tesla had a challenging quarter, reflecting the market.
Because of ongoing supply chain issues and the difficulty in obtaining batteries, particularly for electric vehicles, the auto sector as a whole is now struggling, she added.
Tesla is the market leader for electric vehicles in the US, but in Europe and China, where such vehicles are more common, there is far more competition.
Competitors have also stepped up their efforts in the US.
BMW, a German automaker, announced on Wednesday that it would invest $1.7 billion to increase the manufacture of electric vehicles in the US.
Elon Musk claimed the demand for Tesla vehicles was skyrocketing a few months ago. However, demand is currently absurdly outpacing production, he declared.
However, based on these numbers, it doesn’t appear to be the case. Financial pressures are impacting profitability as Tesla produces more cars than it sells. In addition, profits are being harmed by challenges with the supply chain and the price of raw materials.
However, Tesla investors are more worried about its long-term prospects than the company’s immediate financial challenges.
Because of this, the uncertainty around Tesla’s demand is highly harmful. It helps to explain why Tesla’s share price dropped despite a set of results that appeared to be solid.
It also explains why Mr. Musk referred to Kibosh when he discussed demand difficulties on the earnings call.
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After agreeing to purchase Twitter, many Tesla investors are concerned that Mr. Musk isn’t investing enough time in the business. Unfortunately, these findings are unlikely to alter that opinion.