Tesla reports record-high Q3 deliveries, but YoY operating profit falls 40%

Core Insights - Tesla's total Q3 revenue increased 12% year-over-year to $28.1 billion, with a nearly 20% rise from Q2 [3] - The company reported a record-high number of deliveries in Q3 of 497,099 vehicles, a 7% year-over-year increase, but operating profit fell by 40% from $2.7 billion to $1.6 billion [8] Revenue Breakdown - Automotive revenue increased 6% year-over-year in Q3 to $21.2 billion, driven by a rush of electric vehicle shoppers before the expiration of a tax credit [8] - Revenue from Tesla's energy storage segment grew by 44% year-over-year to $3.4 billion, with 12.5 GWh of energy storage capacity deployed, marking an 81% year-over-year increase [6] Sales Performance - Sales of the Model 3 and Model Y increased 9% from Q3 2024, totaling 481,166 vehicles, while combined sales of the more expensive Model S, Model X, and Cybertruck fell by 53% year-over-year [4] - The decline in sales of higher-priced models indicates a shift in consumer preference towards more affordable electric vehicle options [4] Operational Challenges - Tesla's operating margin dropped 46% year-over-year from 10.8% to 5.8%, attributed to higher fixed costs per vehicle, lower revenue from regulatory credits, and a decline in Full Self-Driving (FSD) revenue [8] - Operating expenses increased by 50% year-over-year to $3.4 billion due to investments in AI and scaling the robotaxi business [7] Future Outlook - Tesla plans to make additional investments in AI and expand its AI training computer capacity to support future autonomous driving development [7] - The company aims to make its EV model lineup more accessible following the expiration of the federal tax credit, launching new models at lower price points [5]