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Tesla posts record revenue and profits in third quarter

Tesla reported third-quarter earnings after the bell Wednesday, and it’s a beat on both the top and bottom lines.

The company’s stock dropped less than a point after hours on the results. Here are the results.

Earnings per share (adjusted): $1.86 vs $1.59 expected per RefinitivRevenue: $13.76 billion vs $13.63 billion expected per Refinitiv

The company reported $1.62 billion in (GAAP) net income for the quarter, the second time it has surpassed $1 billion. In the year-ago quarter, net income was $331 million.

The record results were driven by improved gross margins of 30.5% on its automotive business and 26.6% overall, both of which are records for at least the last five quarters.

Automotive revenue rose to $12.06 billion and costs of automotive revenue amounted to $8.38 billion for the quarter.

Tesla also generated $806 million in revenue from its energy business, which combines solar and energy storage products, and $894 million in services and other revenue, which includes vehicle maintenance and repairs, auto insurance and sales of Tesla-branded merchandise among other things, Tesla has disclosed in past financial filings.

For its energy and storage business, costs of revenue rose to the highest number in the last five quarters to $803 million during the third quarter.

In a shareholder deck that Tesla released before a call to discuss Q3 results, the company said, “A variety of challenges, including semiconductor shortages, congestion at ports and rolling blackouts, have been impacting our ability to keep factories running at full speed.”

Even with those issues, the company reiterated prior guidance that it expects to “achieve 50% average annual growth in vehicle deliveries” over a multi-year horizon.

The company recorded a $51 million impairment related to its investment in bitcoin, which it reported under “restructuring and other” expenses.

Tesla previously reported deliveries of 241,300 electric vehicles and production of 237,823 vehicles during the period ending September 30, 2021.

Unlike other automakers, Tesla’s sales rose during the quarter, setting a new company record, despite chip shortages and supply chain challenges weighing on the industry. (Deliveries are the closest approximation of sales that Tesla reports.)

Many other automakers have reported record profits during the semiconductor chip shortage due to resilient consumer demand, but they have not been able to produce better sales due to the supplier constraints.

In a Q3 2021 shareholder deck, Tesla remained non-committal on the start date for production of the hotly anticipated Cybertruck. The company is saying only that production of the non-traditional truck will begin at some point after Model Y production commences in Austin, where Tesla is building a new vehicle assembly plant.

Last quarter, CEO Elon Musk said he would no longer lead earnings calls by default. He may choose not to address shareholders and analysts on Wednesday, which would surely disappoint his fans.

Investors submitted questions to Say Technologies, a site Tesla uses to poll shareholders ahead of earnings calls, seeking updates on the now-delayed Cybertruck, Tesla’s 4680 battery cells, and whether a $25,000 electric car, which Musk teased last year, is still underway. The company’s strategy for weathering supply chain issues will also be in focus.

Tesla said on Wednesday that for its standard range vehicles, it will be “shifting to Lithium Iron Phosphate (LFP) battery chemistry globally.” Previously, Tesla used lithium-ion battery cells with a nickel cathode in its US-made standard range vehicles. Because iron is more abundant than raw materials used in other lithium-ion battery cells, like nickel and cobalt, LFP battery cells are generally more affordable to produce today.

This is a developing story. Check back for updates.

Correction: Due to an editing error, a previous version of this article misstated the components of Tesla’s services revenue. FSD subscriptions are counted as part of automotive revenue.

— CNBC’s Michael Wayland contributed reporting.

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