Tesla is Now a Typical “Car Company,” Writes Bernstein Analyst; “We Dug Our Own Grave,” Says Elon Musk

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“Hoist(ed) by its own petard,” say Tesla bears. And, after yesterday’s bleak earnings release and a disastrous earnings call, the bears are out in full force today for their victory lap.

There was quite a lot to digest yesterday. Tesla failed to meet consensus analyst expectations regarding its top-line and bottom-line metrics, hammered by a steep drop in its auto gross margin (ex-Regulatory Credits), which declined from 26.7 percent in Q3 2022 to just 16.3 percent in Q3 2023. Given the deep additional price cuts that Tesla has instituted in several key markets this quarter, such a decline is only logical.

Tesla Q3 2023 Earnings Summary


Surprisingly, while Tesla’s ex-RC Average Selling Price (ASP) fell by 18.1 percent on an annual basis, the company’s Cost of Goods Sold (COGS) metric for its auto stores decreased by just 4.8 percent.

Nonetheless, it was the earnings call, beset by a still-green CFO and a somewhat paranoid CEO, that unleashed the true horror for Tesla bulls. The new CFO, Vaibhav Taneja, could provide no visibility on whether Tesla’s auto gross margin (ex-RC) has, in fact, hit a cyclical nadir. Taneja also could not answer why the EV giant was not focusing on subsidizing its car loans to address the weak consumer affordability metric and, instead, was glued to the margin-destroying price discounts.

Of course, Elon Musk stole the proverbial limelight when he pronounced:

“We dug our own grave with Cybertruck.”

Musk spent a fair amount of time tempering expectations regarding the latest addition to Tesla’s product portfolio, noting that the company would probably be able to attain a volume production level of 250K Cybertrucks per year only by 2025. On the bright side, there are now over a million reservations for the Cybertruck. Elon Musk also hinted at “slow-walking” Tesla’s newest factory in Mexico until the macroeconomic background improved.

For Tesla, the reckoning for yesterday’s events has come swiftly, with Goldman Sachs, Morgan Stanley, Citi, and Wedbush all slashing their target for the company’s stock price.

No one on Wall Street, however, can match the scathing comments by Bernstein analysts, who now increasingly view Tesla as a run-of-the-mill auto company operating in an industry that does not allow “volume participants to have sustained outsized margins.”

Tesla shares are currently down over 6 percent in pre-market trading.

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