Tesla Motors (NASDAQ: TSLA) reported earnings for the third quarter of fiscal year 2016 on Wednesday, October 26th. In the July-September period, the company delivered 24,821 vehicles, 16,047 of which were Model S deliveries and 8,774 were Model X. According to the company, 5,065 vehicles were still in transit by the end of the quarter and would only be delivered in Q4. Over the period, the Silicon Valley based auto maker produced 25,185 vehicles, an increase of 37% compared to the previous quarter and 92% compared to the third quarter in fiscal year 2015.
Since, the company mentioned that close to 5,000 vehicles were in transit at the end of the second quarter as well, around 20,000 vehicles made in the quarter were delivered during the period. For the three quarters of the year so far, the company has produced close to 58,000 units and delivered around 53,000. If the company keeps up the growth at which it has increased its production rate in the fourth quarter, it can meet its full year target of delivering between 80,000 and 90,000 units for the full year.
In the third quarter, the company reported a gross margin of 27.7%, a 300 basis point increase compared to the third quarter of the previous year. As you can see from the table above, Tesla’s average revenue per unit sold increasedd by 17% year over year but its average cost of manufacturing a car only increased by 12.5%. Tesla also posted a positive operating income for the first time this year, with an operating margin of 3.7%. Going forward, it will be tough for the company to repeat this performance since it will require a large amount of capital expenditure going forward as it scales up its distribution and production of vehicles, goes forward with the Solar City acquisition and ramps up production of lithium ion batteries at its Nevada Giga Factory. For the fourth quarter, the company has forecast deliveries of just over 25,000 units, with close to a third of these vehicles to be sold via Tesla’s lease program.
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