EVs were a boon for some and a bust for others in the auto industry’s latest round of earnings reports.
Market leader Tesla handed in strong Q3 results, beating analysts’ profit expectations and predicting robust sales growth next year. General Motors had a solid quarter and assured Wall Street it’s moving toward making its EVs profitable. Ford’s report was more downbeat, with its EV business weighing on results.
Tesla’s stock is up around 4% year to date. GM’s is up around 45%, while Ford’s is down about 14%.
Gradual progress: Ford on Monday reported Q3 profits of $900 million on revenue of $46 billion. The automaker said that results were muted by high warranty costs and a $1 billion charge related to dialing back some of its electrification plans. Executives said they expect full-year earnings to come in at the lower end of their guidance, at about $10 billion.
While its commercial and combustion engine vehicle businesses were profitable, Ford’s EV business unit lost $1.2 billion. The company said that YoY cost improvements “were offset by expected industry-wide pricing pressure.” The company reported that it has achieved nearly $1 billion in cost improvements in the EV business so far this year, but still expects full-year losses of $5 billion.
“No doubt there’s a global price war and it’s fueled by overcapacity, a flood of new EV nameplates, and massive compliance pressure,” Ford CEO Jim Farley said on the company’s earnings call.
GM, meanwhile, reported $3 billion in profits on revenue of nearly $48.8 billion. The automaker said it’s making “progress on EV profitability, along with rising sales and market share growth.” The company boosted its full-year adjusted earnings guidance to between $14 billion and $15 billion.
“I want to be clear that we are not mistaking progress for winning. Competition is fierce, and the regulatory environment will keep getting tougher,” CEO Mary Barra said in a letter to shareholders. “That’s why we are focused on optimizing our ICE margins and working to make our EVs profitable on an EBIT basis as quickly as possible.”
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GM’s autonomous vehicle unit, Cruise, reported an operating loss of more than $400 million, down from roughly $800 million a year ago.
Wedbush Securities analysts wrote that the report was “very strong as the company strings together consecutive impressive quarters by remaining diligently focused on optimizing both its ICE and EV portfolios while balancing new debuts and working with urgency on the profitability side.”
Exceeding expectations: Tesla reported profits of nearly $2.2 billion (up 17% YoY) while revenue grew 8% to more than $25 billion. The results surpassed analysts’ expectations, lifting Tesla’s stock.
On the company’s earnings call, CEO Elon Musk predicted that vehicle deliveries could grow as much as 30% next year. He also provided more clarity on Tesla’s next-gen vehicle plans, indicating that the automaker is focused on delivering a robotaxi product rather than a lower-cost EV. He also claimed Tesla could be offering driverless rides in Texas and California by next year, despite needing to get regulatory approvals.
The rosy report follows a rough patch for Tesla, which faces growing competition and falling EV prices as it tries to persuade investors that its valuation should be driven by its AI and robotics plays. But it still has a lot of work to do to prove this, according to some experts.
“Until Musk outlines a clear bridge strategy—how Tesla plans to traverse from its current position to the ambitious future he recently unveiled—many questions and doubts will linger,” Jessica Caldwell, Edmunds’ head of insights, said in a statement via PR rep Talia James-Armand.