Episode summary
Tesla’s Profit Tumbles as Costs Undermine Record EV Sales | Bloomberg Intelligence
Bloomberg Intelligence
· · Hosts: Paul Sweeney, Scarlet Fu · Guests: Steve Man, John Butler, George Ferguson, Nathan Naidu
Summary
Tesla’s third quarter showed the gap between record vehicle sales and profitability: operating profit plunged 40%, and the analyst said rising depreciation, tariff costs and higher R&D more than offset the benefit of higher volume. He argued that the spending increase may reflect Tesla’s shift toward robo-taxis, FSD and Optimus, but said the company still needs cars to generate the cash that funds those bets. He also said Elon Musk’s push for a $1 trillion pay package is really about control, not money, and that retail investors may be more willing than institutions to back his long-term vision.
The analyst said Tesla’s future still depends on car sales in markets such as India, Japan and South Korea, even as Musk talks less about autos and more about “physical AI.” In China, he said Tesla remains respected and is benchmarking local competitors on autonomy, but regulatory approval for FSD is still pending.
Elsewhere, T-Mobile’s quarter was described as mixed: subscriber growth stayed strong, but pricing was weak in a promotional market. The telecom analyst said the company is leaning on network quality and may use fiber M&A under its new CEO. Airlines also stayed in focus, with American guided to a stronger fourth quarter and Southwest trying to monetize bags, seating and loyalty, though the analyst said investors are still digesting whether those changes will translate into bottom-line gains. The technology analyst said cloud gaming should steadily erode console demand as mobile devices, 5G and data centers improve.
Key takeaways
- The analyst said Tesla’s operating profit fell 40% because depreciation, tariffs and higher R&D overwhelmed record vehicle sales.
- He argued Elon Musk’s $1 trillion pay proposal is mainly about preserving control, and proxy advisers’ opposition still matters because index funds listen.
- The analyst said Tesla still needs car sales to fund robo-taxi, FSD and Optimus ambitions, even if investors are focused on long-term physical AI.
- The telecom analyst said T-Mobile’s quarter was mixed: subscriber growth was strong, but pricing stayed weak in a promotional market.
- The aviation analyst said Southwest’s bag fees, premium seating and other initiatives could add revenue, but the market is still unsure how much will reach the bottom line.
- The technology analyst said cloud gaming should gradually reduce console relevance as 5G, cloud infrastructure and mobile gaming improve.
Notable quotes
“operating profit plunged 40% and we're now looking at a fourth straight quarters of falling earnings and no real sign that that's going to turn around anytime soon either”
“I do believe that it's more about the control of the company. Look, Tesla doesn't have the dual class shares like some of the tech companies have”
“he needs to sell cars. He needs to continue to sell cars to actually generate the cash to support his endeavors”
“subscriber growth was up. That was strong, pardon me, but pricing was a little bit weak”
“I think the marketplace is a bit challenged to get its its head around, you know, whether or not all of these really roll through the bottom line for Southwest”
How the episode opens
Bloomberg Audio Studios podcasts radio news. You're listening to the Bloomberg Intelligence Podcast. Catch us live weekdays at 10 a.m.
Eastern on Apple CarPlay and Android Auto with the Bloomberg Business App. Listen on demand wherever you get your podcasts or watch us live on YouTube. Let's bring in Steve Man, Bloomberg Intelligence, Global Autos, and Industrials research analyst to recap Tesla earnings.
help us look ahead for this company, Steve. Uh, record quarter vehicle sales, which we knew, but operating profit plunged 40% and we're now looking at a fourth straight quarters of falling earnings and no real sign that that's going to turn around anytime soon either. Yeah.
Uh, it was quite a surprise given the volume of production. Uh, you would think that uh, you know, the fixed cost absorption would be higher this quarter than in the past, but it didn't happen. Looks like you know our uh looks like uh uh the appreciation cost uh increased for them looks like the tariff cost impact is is greater than expected and then even below the gross margin line uh the R&D cost uh went up quite a bit that you know that could be viewed as a good thing because that's the you know that's a sign they're pivoting to you know the robo taxi the FSD and you know the Optimus robots and Elon Musk uh I guess towards the end the call made a plea for uh investors to approve his $1 trillion pay package.
Quote, this is from Elon. There needs to be enough voting control to give a strong influence, but not so much that I can't be fired if I go insane, Mr. Musk said.
Um, how did that go over on the call here? And what's the thinking among investor community about what may be a $1 trillion pay package?
From the episode’s captions: roughly the first two minutes, lightly cleaned. Keep watching on YouTube →
Topics
- tesla earnings
- ev sales and costs
- telecom earnings
- airline earnings
- cloud gaming and generative ai
Companies and tickers mentioned
- TSLA
- TMUS
- AAL
- LUV
- Tesla Inc.
- T-Mobile US Inc.
- US Cellular
- American Airlines Group Inc.
- Southwest Airlines Co.
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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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