Tesla’s earnings were reported to investors on October 20, and the financial results paint the last quarter as bright despite the ongoing pandemic and supply chain issues. For the ninth straight quarter, Tesla has generated a profit from its operations, achieving a $2.0 billion operating income on a total gross profit of $3.66 billion.
Markers for profitability were exemplary for Tesla in Q3 2021. The total GAAP gross margin rang in at an impressive 26.6% and the adjusted EBITDA margin was 23.3%. The carmaker ended the quarter with a free cash flow of $1.3 billion.
The prevailing reason for the EV brand’s remarkable profitability in Q3 has to do with the number of vehicles produced and delivered. In the face of supply chain complications and a scarcity of semiconductor chips, Tesla managed to produce 237,823 vehicles between July and September and delivered 241,300 units. That represents an increase of 73% from the same period one year ago.
Of the vehicles delivered, in excess of 96% were the Model 3 sedan and Model Y compact SUV, once again emphasizing the attractiveness of mass-market EV vehicles over their full-size and luxury stablemates.
Named fastest-growing brand of 2021
After emerging on Interbrand’s Best Global Brands list last year, Tesla has made incredible strides this year. They’ve jumped up the list to 14th position on an “unprecedented” growth of 184% in the past year.
Interbrand Global CEO Charles Trevail said in the press release, “Direction, agility, and participation are three key themes we’ve seen driving brand growth over the past year. Perhaps unsurprisingly, given the constantly evolving business landscape, employee buy-in, adapting to change and a strong customer base have helped certain brands to thrive.
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It’s worth calling out Tesla’s growth over the past year — a three-figure increase in brand value is unprecedented in the past 22 years of Best Global Brands. Tesla is a brand that epitomizes the importance of brand direction, agility and participation, so I’m unsurprised Tesla made the biggest leap up the Best Global Brands ranking in 2021.”
Chinese battery tech coming to the US
To maintain and accelerate profitability, Tesla plans to modify manufacturing practices in the US to be like those used in their Chinese plant. Rather than lithium-ion, Chinese-built Tesla models use lithium iron phosphate batteries that are advancing in energy density, and they’re notably more stable and cheaper than Li-ion batteries.
By changing the type of batteries used in domestic Tesla Standard Range model production, there should be little difference in performance but a positive impact on the company’s bottom line.
Growth despite regulatory challenges
Tesla’s growth in the past quarter hasn’t come without pains. In addition to supply chain headaches, they’ve faced growing pressure to recall Tesla models equipped with the Autopilot feature. The NHTSA has pinpointed 12 accidents where the technology was in use, most of which occurred after dark.
Missy Cummings, Duke University engineering and computer science professor, has been named to the NHTSA in what’s been called a temporary assignment, and she has been vocal in the past about Autopilot’s potential to be confusing, calling it “unreliable and unsafe” in a 2019 tweet. Tesla CEO Elon Musk shot back on Twitter this past Tuesday about the appointment, saying, “Objectively, her track record is extremely biased against Tesla.”
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