Tesla shares reverse course as spending concerns return
?s shares reversed course after the company reported lower third-quarter profit and outlined heavy investment in AI, robotics and autonomous transport. Revenue…
Tesla shares reverse course after the electric-vehicle maker reported a 42.7 percent drop in third-quarter profit, while its plans for AI, robotics and autonomous transport raised questions about spending. Revenue was essentially flat at $28 billion.
The company posted $787 million in profit for the quarter, down from the year-ago period, according to a report by finance.yahoo.com. The earnings followed a Wednesday disclosure by Elon Musk that independent director committees at Tesla and SpaceX had been formed to discuss a possible merger.
Musk offered no further details about the potential tie-up on Wednesday. The merger discussion had helped lift shares of both companies that day, the report said, but Tesla’s financial results and investment plans left investors weighing the cost of its ambitions against current earnings.
Spending accelerates as profit falls
Tesla’s research and development spending more than doubled as the company increased investment in AI, robotics and autonomous transport. Capital spending also more than doubled in the third quarter, reaching $4.7 billion.
Chief Financial Officer Vaibhav Taneja said the company now expects to spend $20 billion, compared with a projection he made in July of more than $25 billion. He said Tesla had managed “our capital deployment efficiently.” The revised plan is still more than double the company’s 2025 capital budget of $8.5 billion.
The report also noted marginally lower car sales and reduced revenue from regulatory credits and energy and storage. Auto sales for the quarter topped estimates, helped in part by stronger European markets amid high gasoline prices, but that increase did not prevent profit from falling.
That gap matters to investors because Tesla is committing more money to projects whose financial contribution remains uncertain. Company officials said the robotaxi venture could become financially meaningful as early as next year if its current growth pace continues. They also said the rollout is being paced to avoid safety problems.
Robotaxi and chip plans draw scrutiny
Tesla highlighted the September 3 launch of its robotaxi service in Austin. The company said “cumulative unsupervised Robotaxi miles grew eightfold quarter over quarter.” The report, citing FSD Database, said there are currently about 800 robotaxis in Texas, where Tesla has focused its launch.
The rollout has progressed more slowly than hoped, according to the report, adding to questions around the company’s autonomous-driving plans. Tesla is also investing in Optimus humanoid robots and a large chip factory in Austin being built jointly with SpaceX, called Terafab.
Musk described Terafab as “the most valuable building in the world” and said its economic value could place it “in the top 20 of countries.” He also projected Tesla production of five million in 2030, compared with 1.7 million in 2025.
The merger possibility adds another uncertainty to the company’s investment story. Tesla and SpaceX have a combined equity value of more than $3.5 trillion, the report said. CFRA Research equity analyst Garrett Nelson said, “We think it's a matter of when, not if” the companies combine.
Nelson also cautioned that the prospect of a major deal raises questions about Tesla’s future. Tesla’s latest reported third-quarter profit was $787 million.
Source: finance.yahoo.com
