Episode summary
Instant Reaction: Tesla Earnings Miss Despite A Sales Surge | Bloomberg Intelligence
Bloomberg Intelligence
· · 15 min · Hosts: Paul Sweeney, Carol Massar, Tim Stenovec · Guests: Ed Ludlow, Ross Gerber
Summary
Tesla’s third-quarter results beat on free cash flow but missed on profit, and the discussion centered on why the cash generation looked so much better than the earnings line. The host and a guest pointed to record EV deliveries, the expiration of U.S. EV tax credits, promotional activity, and inventory clearing as major drivers, while also noting Tesla’s own long list of headwinds, including tariffs, fiscal policy, R&D spending, and vehicle mix.
The guest argued that Tesla is in a transition period, with the company trying to ramp standard versions of the Model 3 and Model Y while also making room for new products such as Optimus, its humanoid robot. But the guest said Tesla still has not provided a clear growth outlook for this calendar year or next, and that the business is being reshaped by policy changes that are no longer as supportive of EV demand or energy storage.
Ross Gerber was more skeptical on valuation and product execution. He said Tesla remains a hold for his firm, but he is not recommending new buyers at current prices and does not believe vision-only full self-driving works. He argued Tesla’s robo-taxi and robot ambitions still depend on solving self-driving first, and that without that, the stock’s upside is hard to justify.
Key takeaways
- The host said Tesla’s third-quarter free cash flow of $3.99 billion far exceeded the $1.25 billion estimate, helped by record deliveries and inventory clearing.
- A guest said Tesla’s profit miss reflected tariffs, fiscal policy, R&D costs and promotional activity rather than a severe operational breakdown.
- The guest said Tesla is in transition, with standard Model 3 and Model Y ramps and an Optimus assembly line now being installed.
- Ross Gerber said Tesla is a hold for his firm, but he is more likely to recommend selling at current prices because of the premium valuation.
- Gerber said he does not believe Tesla’s vision-only full self-driving works and sees that as the key hurdle for any robo-taxi or robot payoff.
Notable quotes
“The company posted thirdarter profit that fell short of Wall Street's expectations despite record EV sales”
“Free cash flow. Ed, third quarter free cash flow, $3.99 billion. The estimate was for $1.25 billion”
“Tesla is listing a very long laundry list of impacts here ranging from tariffs, fiscal policy, R&D costs, the mix of vehicles they sell”
“In this case, they haven't really given us a big picture outlook for their growth for this calendar year nor next year or going forward”
“I just don't think it works. And I think vision only systems don't work. And I'm very sure of this now”
How the episode opens
Bloomberg Audio Studios, podcasts, radio, news. This is a breaking news update from Bloomberg. Instant reaction and analysis from our 3,000 journalists and analysts around the world.
Tesla earnings. The company posted thirdarter profit that fell short of Wall Street's expectations despite record EV sales. It's a sign of the pressure that automakers are facing from shifting federal policies and rising costs.
I want to bring in Ed Lello. He's the co-host of Bloomberg Tech on Bloomberg television. He joins us from our San Francisco bureau.
Really interesting number when it comes to cash flow. Free cash flow. Ed, third quarter free cash flow, $3.99 billion.
The estimate was for $1.25 billion. Why? How?
Funny. I just posted in the IB on the Bloomberg terminal. Hey team, free cash flow so much higher.
Why? Answer from editors and other reporters. Energy storage.
That's to say don't know. I mean, I've read so much of the deck already. Well, I want to I I want to help us out, Ed, because Thomas Thornton over at Hedge Fund Telemetry sending an an IB to me uh during the Simoc cast.
He said inventory cleared out with EV subsidies ending. That's why cash flow was strong. Was this about inventories?
Uh remember that the the number from the third quarter, which was just shy of 500,000 vehicles, was heavily influenced by the expiry of the federal uh tax credit on on consumer EVs. In part, Tesla did additional promotional um activity around that. So you know elsewhere on the bottom line you know if it's EPS or other metrics they've missed on part because of those factors right you know the discounting and other promotion they did inventory will be a factor we've been tracking a build up in inventory that Tesla had going into that period but remember they also saw an inventory build up ahead of the cheaper Model Y and Model 3 standard coming out with some consumers holding off because they knew that some kind of product was going to be unveiled in the month of October.
From the episode’s captions: roughly the first two minutes, lightly cleaned. Keep watching on YouTube →
Topics
- tesla earnings
- electric vehicle sales
- automaker costs
- federal policy
- market reaction
Companies and tickers mentioned
- TSLA
- Tesla
- Gerber Kawasaki Wealth and Investment Management
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Summary, takeaways and quote selection by Octagon. Quotes are short excerpts; the full conversation is in the episode.
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