Hey everybody Rob Maurer here, happy earnings day today. Of course we're going to be going through Tesla's shareholder letter and financials and then later on we'll have the earnings call. The link for that will be down in the description if you want to follow along with that. And of course we're doing this live. So if you are joining later, you can check the timestamps to jump ahead to when the actual actual earnings come out. That should be in around 10 minutes from now. So we're just going to kind of hang out until then. We do have a little bit of news to go through from today, not a whole lot, pretty quiet so far that we'll go through and then we'll take a quick look at just recapping the expectations that we talked about yesterday as we kind of wait and refresh waiting for that shareholder letter. But good to see everyone here looking forward to today and just kind of getting an update on Tesla's business, always fun.
So right now obviously not quite as fun of a day for the stock down about four and three quarters percent at 242.68 as we're streaming here. Nasdaq down about 1.6% today. So not a great day for the Nasdaq. Not a great day for other EV companies in the US either. Rivian and Lucid both down pretty significantly more than Tesla on the day today. So again, not great market and we'll see. We need an earnings hopefully with a little bit of a drop here makes things a little bit easier for Tesla after hours. That doesn't sometimes seem to be the case, but we'll see. Turn my phone off here.
All right. So just quick news before we get into the financials, like I mentioned, just kind of previewing what we talked about yesterday. Report today from Reuters that two Chinese suppliers for Tesla are going to be investing nearly a billion dollars in Nui Billion according to the governor who was recently visiting Shanghai. I believe he did a brief stop over at Gigas Shanghai. So kind of an update coming out of that looks like this is going to be close to a billion from these two suppliers, one of which is HSI technology, which is kind of interesting because they do primarily LiDAR stuff, so they've got a few products here, but it seems like overall their primary product is LiDAR with just a couple of other things. You can see they kind of have LiDAR branding on some of these hero images that we'll cycle through. But I wouldn't assume that Tesla uses them for LiDAR other than the fact that it does seem to be their primary product. And again, this is one of the companies that is being named. However, it doesn't already sound like this is a Tesla supplier currently. So my hunch would be that it's for something else because obviously Tesla not doing a whole lot with LiDAR. Obviously, sometimes we see it on test vehicles where Tesla's maybe calibrating other sensors and things like that, but obviously not in any production vehicles. SpaceX uses it, but they wouldn't necessarily be locating near Gigamexico for that obviously. So kind of interesting to see that, but no surprise to see Chinese suppliers of Tesla investing near Gigamexico, we've had reports of that previously. And there's no indication here really on timing, at least that I've seen, which would be obviously the big question. So not a whole lot of new information there, but still, I think, good to hear that suppliers are going to be investing in that area.
And then just kind of a quick one today, local news in near Austin is reporting that Tesla's going to be funding what they're calling an ecological uplift program or pilot project. So it's going to be 120 acres near Gigatexis. You can kind of see, I know the overlay is covering things a little bit here, but you can kind of see some of the plans Gigafactory over here and some of the plans that Tesla has to do along the Colorado River there. And again, they say this is a pilot project. So Elon's talked about this kind of becoming an ecological paradise in the past. So hopefully this goes well and they continue to kind of develop that area in this way. So it should be fun to follow that progress as that happens.
And then quick one from GM. We talked yesterday about them, maybe that was yesterday, maybe two days ago about GM kind of delaying investments in their Orion assembly facility for EVs. They now have also canceled their investor day, which was coming up in about a month. They say that this is related to the UAW negotiations, obviously, allowing executives to focus on that instead, but they're postponing it for a full year. So interesting to see that in the wake of obviously the UAW strikes and those types of things.
All right, that puts us just about at market close here in a few seconds. Kind of see what the stock's been doing. Not a whole lot of new movement. One penny since we started. That's cool. Let's flip over to Excel and just take a quick look at what we're going to be looking at when we do eventually get the shareholder letter. As usual, we'll just kind of walk through Tesla's takeaways and we'll hop over to Excel and put them in sort of summary context and compare how those results come in versus expectations and what we can kind of learn from this as we look ahead, obviously, to future quarters.
All right, so here we've got the Excel sheet adapted a little bit. One quick note. I did actually have things to work up a comment here as we're pointing this out. I did actually have the wrong number in here for automotive sales for analysts consensus yesterday. All the other numbers were correct, including the sum because it's not actually a sum. It's just key in there, but for this one. But this was about $1 billion too high. It was just from last quarter. So I had forgotten to update that. So my apologies on that. I think it was around $21 billion was what was in there yesterday. The actual reality is just over $20 billion for automotive sales. So hopefully, you know, that didn't throw off too much of the conversation yesterday, but just wanted to quickly update on that. And then let me just refresh here to make sure Tesla's not really on the ball with this release as the market did just close. Looks like we don't have anything yet. So we'll keep an eye on that. Usually it's a few minutes after close. So it gives us a chance to kind of look at things here if you didn't catch the episode yesterday. So when we do get the actual results, we'll fill those in here in this Q3 column. I've got my forecast over here as well as how my forecast will compare versus the actual. I might say that Tesla missed expectations at times. We've talked about that before. Stock prices are based on expectations. So it doesn't mean that, you know, if Tesla misses a number, quote unquote, it doesn't mean that the company is failing or that it's horrible or something like that. It's just a way to communicate versus expectations. Same thing with analyst consensus. So that's over here. Let's just change the color back on that since that's correct now. So we'll just put these numbers in and kind of compare. And then obviously, again, the most important thing is just how this, you know, the information that we get here in the context that this gives us for Tesla's business going forward.
All right, let me just refresh a couple of times. Nothing yet. So as we talked about yesterday, you know, I'm forecasting for just over $24 billion in revenue analysts just under that. I do have about $200 million in here from FSD deferred revenue recognition, which is boosting my bottom line forecast by about five cents per share. So otherwise, I would be pretty in line with analyst consensus, even a little bit below. Seems to be what would be driving that would be obviously a little bit lower automotive revenue here, offset by services and others. And then I do have a little bit higher operating expenses as we can see down here, about $150 million. So as we did see R&D and SG&A spike a little bit last quarter, as I think that's related to Cybertruck. So I kind of expect that to continue. We may see some of that shift over to cost a good sold once Cybertruck is actually being delivered.
Well, earnings are out. All right, I'll shut up and let's just hop over here. Let's see. I'll see you guys are messing with me, which happens. Probably. All right, I'm just going to keep refreshing because, I mean, not too much movement. And if you guys are messing with me again, I'm going to be really, really annoying. All right, I don't see anything. If someone that I actually know can comment here and just let me know what's going on, not yet. Okay. I'm going to need like a spotter here that I can trust. Okay. Well, I've been refreshing in the browser. I know you guys can't see that, but we'll just continue what we were talking about here. Apologies. Anyway, my operating income is a little bit higher as I do have higher gross profitability. So even though my automotive revenue is lower, I'm expecting an improvement in cost a good sold where analysts don't seem to be expecting that. So that's where I'm getting to this higher gross profit number, you know, $250 million higher. Some of that comes back as, you know, the operating expenses that I have are a little bit higher. And then that's netting me out a little bit higher, but obviously the primary difference there being driven by FSD deferred revenue and my services and other line a little bit higher. So a couple of those factors that are different, but I would say largely overall, you know, pretty similar expectations here. As we talked about yesterday, as we usually talk about auto gross margin X credits is going to be one of the big things that I look at. I've got 18.9% here actually improving quarter over quarter. But if we take out the FSD deferred revenue, then this drops down to 18.1. So just kind of holds a quarter over quarter.
All right. Well, looks like it's out. We see a big drop in the stock here. Stocks down to 237. Sometimes this happens though, and it's just kind of like a fake move. I'm going to flip back to Safari though. One second. You guys can watch me refresh. Yeah, I'm not seeing anything yet. But as we can see, the stock just dropped really quickly here, which usually indicates that it's out. But now it's recovered, you know, a few percent. So we dropped down to 237. 236. Now it's back to almost 240. Maybe you guys tricked the market too. Well, I don't know. Maybe something leaked or something. I don't know. Perplexing. There we go. So it probably was out. Maybe just took a second to sync here. All right. We got our update. So let's just take a look. Operating margin 7.6%. So that's definitely below what I had in there. Take a look at some of the other numbers. I don't want to jump too far ahead. Let's just take a quick look at some of the numbers in here, and we'll see. And then we'll kind of read through because obviously Tesla's going to give us a lot of context that is helpful. So right away, I'm seeing my revenue figures were higher than what we see on all three lines here. I'm covering that a bit. But I'm a little bit high on automotive revenue, a little bit high on energy storage, a little bit high on services and others. Gross profit, also high. So let's see what EPS net out out. So 66 cents and 53 cents. I'm guessing we're not seeing any deferred revenue in here. Growth and regulatory credit sales. So let's see. Yeah. So probably none of that included. But definitely looks like a little bit lower than expected by analysts and obviously by myself as well. That being said, we'll look through this and just kind of see. Take a quick look. Looks like the stock again, kind of recovering a bit. So actually not too bad of a reaction so far despite this coming in below the expectations from analysts. All right. So let's read through this because obviously that's going to be more important than just a quick quick look at the financials. All right.
So on the first page saying our main objectives remained unchanged in Q3 2023 reducing cost per vehicle, free cash flow generation while maximizing delivery volumes and continued investment and AI and other growth projects.
Cost of goods sold per vehicle decreased to about $37,500 in Q3. While production costs at our new factories remained higher than our established factories, we have implemented necessary upgrades in Q3 to enable further unit cost reductions. We continue to believe that an industry leader needs to be a cost leader. In a high interest rate environment, we believe focusing on investments in R&D and capital expenditures for future growth while maintaining positive free cash flow as the right approach.
Year to date, our free cash flow reached $2.3 billion. While our cash and investment positions continues to improve. We have more than doubled the size of our AI training compute to accommodate for our growing data set, as well as our optimist robot project. Our humanoid robot is currently being trained for simple tasks through AI rather than hard coded software and its hardware is being further upgraded.
Lastly, we combine a gross profit generation of over half a billion dollars. Lastly, with a combined gross profit generation of over half a billion dollars in Q3, our energy generation and storage business and services and other business have become meaningful contributors to our profitability. That would be roughly an eighth of what Tesla's profit number here is. We have $4.2 billion in total gross profit, energy and service and others accounting for a little bit less than an eighth of that, a little bit more than 10%.
We just took a quick look at the financials. Obviously, these are going to come in below what we had talked about in the forecast. Free cash flow, actually a little bit lower than what I would have guessed, but we can see capital expenditure stepping up a little bit as likely related to what Tesla is talking about here with doubling the size of AI training compute and things like that.
Financial summary, revenue grew 9% year over year. And by the following things, increase in vehicle deliveries, increase in growth of the other part of the businesses, growth in other parts of the business, reduced average selling price year over year, excluding foreign exchange impact and a negative foreign exchange impact of $400 million.
So last quarter, that was I believe $600 million here and again, this is a quarter or sorry, a year over year number. So a relatively similar impact year over year to what we would have seen in the second quarter.
In 2020, operating income decreased year over year to 1.8 billion, resulting in a 7.6% operating margin. Year over year, operating income was primarily impacted by the following items, reduced ASP, increase in operating expenses driven by Cybertruck, AI and other R&D projects, cost of production ramp and idle cost related to factory upgrades, negative foreign exchange impact, offset a bit by growth in vehicle deliveries, lower cost per vehicle and IRA credit benefit, growth, growth profit growth and energy generation and storage, as well as services and other, growth in regulatory credit sales. So that's again, a year over year number there. I haven't seen that red credit number yet. Let's see what that was. I'll have to look for that down on the bottom.
And then cash. So nice to see cash increasing despite, you know, obviously a drop here in some of the margin numbers, still adding cash to the balance sheet, driving that up to $26.1 billion in Q3 of cash and cash equivalents. Driven by financing activities of $2.3 billion, so we'll have to take a look at what that was. I'm not sure maybe Tesla taking on some debt, which would be a little bit weird, probably not, but we'll see what that was. Maybe I'll talk about that on the call production.
We knew deliveries. We knew subject release accounting. So we'll keep that number in mind when we calculate ASPs a little bit later. Vehicle supplies, we'd already calculated that out based on the delivery and production report. So that holds a study at 16 days.
Solar dropped significantly, 49 megawatts installed. So I don't know, obviously not a good trend here for solar. Tesla talked about the impact of high interest rates on this last quarter. I would have hoped that this would have bounced back a bit, which was what I was forecasting, not anything crazy, but I had 75 megawatts in there. So we'll be interested to hear their thoughts on that on the call, but obviously that business seems to be declining relatively quickly here.
And then storage, a little bit of an opposite situation there, nice growth here, up 90% year over year, almost 4 gigawatts, 4 gigawatt hours. So a little bit below what I had forecast, but this is a new all time high for storage deployed for Tesla. We can see locations, fleet, superchargers, et cetera, stuff there.
And then let's just take a quick look at this capacity thing. I guess let's read what they have to say for us, but we'll come back to this chart and compare that against last quarter, see if there's any new changes there. I think this Cybertruck 125 is probably new, but we'll take a look at that.
So Tesla says during the quarter, we brought down several production lines for upgrades at various factories, which led to us a cultural decline in production volumes. We made for the progress, smoothing out the delivery rate across the quarter with September accounting for about 40% of Q3 deliveries this year compared to September accounting for about 65% of deliveries in a Q3 last year.
So unwinding the wave that continues and now is in a pretty good spot, not quite a third, but pretty close. At Gigatexas, we began pilot production of the Cybertruck, which remains on track for initial deliveries this year. No date that I've seen yet. We'll keep it out for that. We are expecting the Model Y production rate in Texas to grow very gradually from its current level as we ramp additional supply chain needs in a cost-efficient manner. Production of our high density 4680 cell is progressing as planned, and we continue building capacity for cathode production and lithium refining in the US.
So a little bit of a disappointing update, I think they're on the Model Y. Growing production rate very gradually, very gradually, and just gradually from current levels. We don't know exactly what current levels would mean. I would assume that they would be talking about their weekly run rate. Obviously, Q3 had the downtime, so the quarterly number for Texas was quite low, but hopefully they're speaking to a more of a weekly rate there, which would make a lot more sense.
All right, Shanghai, other than scheduled downtime in Q3, our Shanghai factory has been successfully running near full capacity for several quarters, and we do not expect a meaningful increase in weekly production run rate. So similarly again there, just the Model Y in Texas, Shanghai, no significant increases in production planned. Giga Shanghai remains our main export hub.
And then Europe, Model Y remained the best selling vehicle of any kind in Europe, and of any kind in Europe year to date, similar to Texas for their production ramp of Model Y will be gradual. So not really good updates there, setting aside maybe the cyber truck for a second, but Texas. It's ramping very gradually. Shanghai, not really ramping anymore. Berlin, ramping very gradually.
I think as we kind of talked about yesterday, I think Tesla's probably making some decisions to not aggressively pursue production, not as aggressively pursue production as what we have seen from them in the past, based on the current auto market and the demand versus supply curve. So it's a good reminder of all the stuff that we talked about, the higher the margins are, the more room you have to come down and continue to grow production. So just kind of brings us back to all of those types of conversations.
Should be a more fun update on the technology page. Our artificial intelligence software and hardware software that safely performs tasks in the real world is a key focus of our AI development efforts. We have commissioned one of the world's largest supercomputers to accelerate the pace of our AI development with compute capacity more than doubling compared to Q2. So we've seen, we've talked a number of times about that chart that Tesla posted, of the other compute capacity. And this is in line with their forecast for that, maybe even a little bit ahead of what they had said. Our large install base of vehicles continues to generate anonymized video and other data used to develop our FSD capability.
All right. So here we can see cumulative miles. We obviously saw that kind of steeply take off in the second quarter. Looks like in the third quarter, that's continued to increase, but at a more, you know, I don't know if that's sort of the same kind of look at June to March there. It looks like roughly about the same increase in miles. So that means that there's probably not a huge addition of vehicles being added or a huge increase in number of miles that are being driven on FSD more of a, you know, consistent rate since the second quarter. It looks like maybe that increased a bit, but more consistent versus obviously we saw a dramatic increase in the second quarter as Tesla kind of expanded FSD.
All right. Vehicle and other software, all Tesla rentals through Hertz in the US and Canada can now allow Tesla app access. We've talked about that. Customers who already have a Tesla profile, we have their settings and preferences seamlessly applied if you talked about that. The enough service experience was also redesigned to allow customers to schedule service, access their loaner, etc. So we've talked about that stuff.
Custom goods sold. So nice to see that decreasing. But that once we get into the financials, this should be attributed, you know, a part of this can be attributed to 46 80s, improving and being less of a drag. Those have been adding to cost to get sold. So naturally that's going to come out.
We've heard Tesla talk about some of the raw materials inputs starting to come down in cost. Obviously the impact of those during the height of, you know, expenses on those resources if you look at spot prices. Tesla wouldn't be necessarily fully exposed to those, so they're not going to be fully exposed to the downside too. So you might see a lot of that about how, you know, lithiums down, you know, 50% or whatever it was from peak, but Tesla wasn't going to be fully exposed to that 100% peak anyway. So just I'm going to keep in mind as we see stuff like that.
But Tesla says despite macroeconomic headwinds, our plan factory shutdowns in Q3 and ongoing rampant new factories, average cost declined. We continue to work to reduce costs further for heavy vehicles. A high voltage powertrain architecture brings notable cost savings, which is why a cyber truck will adapt an 800 volt architecture. So we've heard about that before as well.
Right, energy storage. Energy storage deployments increased 90% over years, you about 4.0 gigawatt hours, our highest quarterly deployment ever. Continued growth in deployments was driven by the ongoing ramp of the mega factory in California. Toward full capacity of 40 gigawatt hours, what the phase two expansion production rate improved further sequentially in Q3.
All right, solar, let's see what they have to say on this. So decline to 49 megawatts sustained high interest rates in the end of net metering in California have created downward pressure on solar demand. So likely something that we'll kind of continue to see, you know, Tesla not having any sort of comment there about getting the business back or anything like that, which by omission is definitely something worth noting.
Services and other as our global fleet size grows, our services and other business continues to grow successfully with supercharging insurance and body shopping part sales, being the core drivers of profit growth year over year. Paper use supercharging remains a profitable business for the company. Even as we scale capital expenditures, our team is focused on materially expanding supercharging capacity and further improving capacity management in anticipation of other OEMs joining our network.
All right, outlook. We are planning to grow production as quickly as possible in alignment with the 50% compound annual growth target we began guiding to in early 2021. In some years, we may grow faster and some we may grow slower, depending on the number of factors for 2023. We expect to remain ahead of the long term 50% compound annual growth weight with around 1.8 million vehicles for the year.
All right, so we'll have to figure out exactly what the, you know, 50% number comes out to. I thought it was around 1.8 million. It'd be nice to know exactly the number though, because now as we get into the fourth quarter, that becomes a little bit more precise for Tesla saying they expect to remain ahead of it. That means they should, you know, be clearing that bar for the fourth quarter. So we'll take a look at that a little bit later on. But around 1.8 million, as we talked about the around that has been consistent with the language that they've used. That's not a change or anything. So we talked about in the delivery release that maybe that was something to keep an eye on. But again, that's consistent language for Tesla.
Cash, ample liquidity, manage the business that we maintain a strong balance. So nothing new there. Profit while we continue to execute on innovations to reduce the cost of manufacturing and operations over time. That's where we're related profits to be accompanied by an acceleration of AI, software and fleet profits. And cyber truck deliveries remain on track for later this year. In addition, we continue to make progress on our next generation platform.
Right, there's probably some nice pictures there. I'm guessing something cyber truck related. But before we get into that, I don't want to forget to just quickly check how this compares to last quarter, this table here.
So it looks like Shanghai, Tesla has now indicated greater than 950,000. The 750,000 before was significantly understating. Obviously Tesla's been at months where they're producing 80,000 vehicles, which is going to be pretty close to a million vehicles per year. So this is now more reflective of what the reality is. I wouldn't take this as any indication that there's going to be more upside in the Shanghai numbers.
I might have if Tesla had not said successfully running near full capacity for several quarters, and we do not expect a meaningful increase in weekly production rate. Had they not said that, this would be more exciting to me, but it looks like they're kind of just getting it more current with the reality of what Shanghai has been doing.
Berlin at 375. That's the same. Texas greater than 250, so that's the same. And then Cybertruck, so that is different, greater than 125,000 versus before it was in tooling now in pilot production. Maybe not super exciting to see it called pilot production when we've seen the Tesla Semi-In-Pilot production as well, but obviously there can be many different stages of pilot production and sensor-listing capacity. That's obviously a good sign for Cybertruck as well.
Now the capacity number there might be disappointing to some. Again, this isn't necessarily reflective of what Tesla is targeting, certainly long-term. We just talked about Shanghai. Tesla's been listing 750 there for quite some time, but they've been producing more like a million run rate, so it doesn't necessarily mean that Tesla will kind of stop things here, but for the initial stage of Cybertruck production, probably not too surprising to see them kind of around that level.
All right, so let's take a look at some photos. Then we'll get into the financials, more details, Model Y starting price, inclusive of national and state level subsidies.
All right, well, certainly a different photo than we normally would see for Tesla. Usually it's a factory update or something like that, but interesting to see a shift. Tesla highlighting how affordable the vehicle is. There we go, some Cybertruck deliveries begin in November. All right, so that's exciting. Previously in the release, they'd only said this year, so for them to be more specific about November, that's nice, and obviously this is just a phenomenal photo. Don't really have anything else to say about that, but that's super exciting and just really nice photo there from Tesla.
Megapack factory. All right. Give your factory Shanghai one millionth Model Y produced. Of course, we knew about that, and then we get our financials and declining operating margin, unfortunately, and then we get into our financials.
So I do want to take a quick look at automotive. Whew, that's tough. So regulatory credits, $554 million. That's going to be a significant driver of obviously revenues and margins. And even with that, still below my forecast, although now that I'm saying that, since there was no FSD deferred revenue, this actually kind of washes out because I had a combination of 325 million regulatory credits and 200 million deferred revenue. It doesn't look like there was any recognition of that. We'll see if there's a note on that in the 10Q, but this is obviously a quite high number and still only showing, you know, 7.6% operating margin. So obviously it's not quite as simple as just putting this on the bottom line. But if you look at Tesla's operating income, you know, that's almost a third of it from regulatory credits. So if you exclude that, you'd be talking about an operating margin, you know, closer to, I don't know, 4% or 5%, something in that ballpark.
All right, let's see if there's just any other weird lines that kind of stick out here. Income taxes were quite a bit lower. I'll have to do the percentage calculation on that. Let's see, where did we have that significant other income last time? Probably the other income line. So 328 million last time, that's only 37 million this time, so much more normalized to past quarters. So obviously when we look at the quarter over quarter comparison, that's going to be, you know, $300 million less positive contributor to the bottom line that was last quarter.
And then we can see some of the earnings per share numbers, which we had taken a quick look at before. All right, so we'll get into the financials.
然后我们可以看到一些之前我们简单浏览过的每股收益数据。好的,接下来我们将进入财务方面的内容。
I mean, first take, I'm not super thrilled with the, with the report here. Obviously my expectations were a little bit higher in terms of margins. I'm glad that Tesla is bringing costs down. Those were a little bit higher than what I expected. I think it's like $400 a vehicle. So not, you know, maybe it was like 60% of what I had forecast in terms of the cost of goods sold improvement.
And obviously with some downtime and things like that, affecting the, the cost for the quarter, that's going to be a factor, you know, with the transition to highland and things like that. And then, you know, obviously just with this quarter in general, that's also true with downtime. You're going to take a hit on margins. You're going to take a hit on revenue. You're going to take a hit on the whole business. So it's, you know, it's one of those quarters that we not necessarily look past.
There are a lot of things here that I think are important to consider, even with margins, even with the downtime, you know, contributing to that. But it is still worth noting and worth remembering as we kind of look at this quarter. Um, and it's relevance going forward.
All right. So yeah, I mean, I think as I was saying, like it, not, not the most exciting quarter here, I would have liked to have seen stronger margins. X regulatory credits will take a look at what that actually shakes out to. Uh, it's going to be quite a bit lower than my, than my forecast, um, which obviously that means there's pressure going forward. You know, we, we're getting to a point where we can't necessarily see Tesla to continue to lower prices because those operating margins aren't, you know, 7.6% certainly healthy.
It's fine. Tesla's free cash, real positive adding cash to the business. Higher highest cap X ever, I think probably here at 2.4 billion. Um, that's, you know, almost $10 billion annualized. So that's the most important thing as we have talked about before. I don't want to overemphasize anything particular to this one quarter because ultimately long term, what we want to see from Tesla, what Zachar Corne had mentioned last earnings call or maybe in Q one. For Tesla right now, it's about being able to support their investments going forward.
And as we're, as we're seeing here, there's still very much able to do that with this kind of a business. We'd love to see it be more profitable, I think as investors. Uh, but long term, whether Tesla makes, you know, a billion dollars this year or $10 billion this year for an $800 billion company. That's not what the value of the company is about. Obviously, this extrapolates, you know, margins and everything like that going forward and it's, it's relevant, but the actual results in terms of the value to the business, um, aside from what they mean for the future, which is relevant, uh, are not all that significant.
So it's a little bit different. You know, it's that you're kind of holding two thoughts in your head at the same time of, um, this quarter, not that important long term, but some of the things that we learned from this quarter are also important long term. So hopefully that kind of makes sense.
All right. Let's get into the financials, the, you know, the best part of, of these updates. Before we do that, just in case anyone kind of dips out at this point, again, we'll do the earnings calls that'll be in about an hour. The link for that is down in the description. So I'll do my normal following along, taking notes as Tesla goes through the call and then we'll just recap what we learned from the call quickly after they wrap up.
All right. So let's hop back over to the spreadsheet. And as usual, bear with me as I get a how fill this in with the actuals and try not to make any mistakes. If you guys see anything, let me know. Although I'm losing faith in the live chat to give me accurate information after you guys misled me on the earnings being out.
All right. So where do we want to start here? Energy storage. So that's not a good one because it's not on the line I'm looking at. But I'll find it here. So that was 39 80. So I was 13% too high and I was 66% too low. I already know this one's 49. So obviously we're quite a bit high on that one.
All right. Total automotive sales. That's going to be 19, 625. So you know, I'm 1% too high. It's pretty close. But again, I've only got $325 million of regulatory credits in here. I think this was 554 if I remember correctly, but we'll just double check that. So if it looks like I'm not doing anything, I'm flipping back to the browser. I'm not going to waste your guys's time flipping that as well.
But that was the F554. So if we just really quick mental math, exclude regulatory credits, my automotive gross margin would have been at or sorry, my automotive revenue would have been at 19.6 billion roughly versus the actual would have been at 19 points, you know, one, even a little bit less than that. So I was definitely too high on average selling prices. We'll see exactly how that shook out. But as I mentioned, this is one of the areas we just didn't have a lot of insight into.
You know, it's pretty much just a guessing game for everyone this quarter because of the inventory discounts. And no one really having any way to know how many orders were coming from inventory at those discounted prices versus being fulfilled from new orders and things like that. So, you know, I had more than $1,100 drop or about an $1,100 drop in here, but I'm guessing it's going to be a little bit closer to a couple thousand when we get that number in there.
All right. So energy sales, that's going to be 1559. So no surprise that that was a little bit lower. You can see so I got the average selling price right just too high on the results. So also 13% too high on revenue and then service and other definitely was too high on this one. This is probably the lowest growth quarter we've ever seen for service and others services and other looks like Q3 or Q4 in a Q3 last year was, yeah, not even the same level. So probably the lowest growth we've seen. I'd have to go back and look at the history, but caught us off guard with a pretty significant growth there in the second quarter and then really marginal growth here in the third quarter.
We'll take a look at margins though. We haven't seen what those looked like yet, aside from Tesla saying the, you know, the half a billion dollars in profit from those two lines. These numbers are not correct yet. Obviously they did not post 100% margins on everything. So I just need to take the cost out of these lines. So let's just be really careful that we get the totals. Sometimes it's split up with leasing and stuff.
All right. So cost of revenues. Total cost of revenues was 15, 957. So I'm going to take that out. That's going to leave us with our automotive profit. I'm not sure if Tesla, yeah, Tesla puts gross profit. So we'll just make sure that the gross profit lines up when we get through that energy cost of energy sales was 1178. So we'll take that out. So $381 million there, really nice improvement. Wow. 24% gross margin on energy. So that's really great. As I said, I was a little bit hesitant to reflect further increases here, but to see that that's great because this is also a number that Tesla's hitting while they're still ramping. And over time, there should be actually some nice margins from servicing energy projects, as well as obviously some of the software features Tesla employees. So super excited to see that energy margin. That's I think one of the probably the very, maybe not the brightest spot of the quarter, but one of the very bright spots of this quarter, we'd be the energy margin just like last quarter. So it'll be exciting as that business continues to grow. And then service another was 2037. So let me take that out. Looks like someone just said that November 30th for cyber truck deliveries. Thank you for that super chat, by the way. We'll take a look at that in a second. All right. So $4178. That's what I had said before. Yep, so total gross profit matches there.
All right, so we can see here. Obviously, excluding FSD revenue, I would have been at 18.1 for the X credits. Yeah, excluding deferred revenue and excluding credits, I would have been at 18.1 here, but we did see this drop to 16.3. We'll calculate the ASPs. Excuse me here in a second. And then service and others that actually dropped services and other that actually dropped from 7.7% to 6%. So that's going to offset a bit of the benefit that we saw from Tesla Energy. So kind of interesting to see that. Again, not something that we have seen historically from that business. So I'm not sure what exactly happened there in the second quarter, but low revenue growth and drop in margins. Obviously, it's a relatively lower impact line item, but still interesting to see nonetheless.
All right, R&D. So that was 1161. So actually even higher than that. So I'm actually glad that that's one of the things that's driving the operating margin a little bit lower. Obviously if you look here at. So my automotive revenue, obviously was too high offset a bit by Energy. And then service and other, that's going to be a lower impact line. But overall, if you exclude my FSD deferred revenue here, probably off by, I don't know, maybe 50 basis points, 40 or 50 basis points on the gross margin line. And then that's going to be off by more on the operating margin line because it looks like operating expenses are coming in higher.
I don't mind that though, because I'm certainly content with Tesla spending as they feel as necessary on R&D and SGA. I wouldn't want them to constrain that because those are things that are going to allow for future growth in the business. So as we talked about yesterday, rather of higher gross margin and higher operating expenses, then lower gross margin and lower operating expenses kind of knitting out at the bottom and in the same way.
Alright SG&A, so that was 1253, so it looks like that was pretty close to my estimate there. So really the overage, you know, and versus my forecast coming from SGA, or from R&D, sorry. No restructuring in others, so no surprise on that. But good to have that confirmed. Yeah, so operating expenses coming in at about $150 million more than my expectations, primarily driven by the R&D line. So 6% too low, analysts very low at 13% off on that one. So netting out operating margin 7.6% versus mine of 9.4. But again, probably more than half of that coming from differences in really a R&D, if we kind of knitted that out. Maybe not quite half. But although now that I'm saying that regulatory credits, I got to remember that too. So that's one of the things that really boosted, you know, both these numbers.
Alright, EBITDA, take a look at that. Alright, so that's 3758, non-Gapnet income. It's going to be 2318. Stock-based compensation, 465. We'll have to get those right. Wish more of them had been right. It's like it was this Gapnet income 1853. We'll just double check that. Make sure that's alright. It is. And we're at 66 cents here, 53 cents here.
Alright, so fatefully, let's calculate the new bottom line for the PE. That's going to be $3.11 coming down from $3.53. So not sure exactly what the stock's doing. Stock is up. Wow. That's very surprising to me. Just to show how low the expectations were for this report. Obviously, miss of analyst expectations, but as we talk about sometimes the whisper number or the real expectations don't really match what those analyst figures are. But right now, Tesla up 2.3% after hours. Obviously, a tough day today, but still interesting to see that. Maybe that's from the cyber-drug date being said, I don't know. So I forgot what I was talking about there. PE. So we're at, let's say, $2.49 now keeps going up. And $3.11. Price earnings is about an 80 versus before.
I guess I can just change this. We'd have been a 70. So 70, 71 now going to 80 at the same share price with the lower EPS number here. Free cash flow. Obviously, I'm just going to put $800 in here for now. I know it was in that ballpark. We don't need the exact figure there. I'll just update that later. All right, let's get ASP. So we need a couple of things for that. Get my ASP calculator over here. Auto revenue from leasing. Let's put that in there. So that's going to be $4.89 cost of leasing. It's $3.01. And at least deliveries was something $17,000. Where did that one go? $17,423. And that should fill this in for us. We'll just shrink those a bit.
Alright. So that was 1% too high on ASP. We don't get an analyst estimate on that. We don't get enough information to calculate it. But it looks like it was a decline quarter of a quarter of about $1,500. Get the exact number there. A little bit less than $1,500 versus cost declining by about $500, $4.21. So that's obviously what's compressing the margins down to this 16% X credit number. Overall, numbers being pretty significantly boosted by the 554 million in regulatory credit revenue. I'm not surprised to see that bounce back. Obviously, my forecast was for a smaller bounce back. But obviously, the last quarter was quite a bit lower than where Tesla's been averaging. And I would expect it probably drops a little bit more in Q4. With this being maybe a little bit tougher of a quarter, and there's being some downtime, things like that, Tesla might have wanted to boost that a little bit more on the regulatory credit sales line, particularly for this quarter.
All right. So trying to think of anything else I want to point out about that. But yeah, I mean, I was forecasting a little bit more than 1,000. Came into down 1,400 and not too bad in terms of the difference there, I wouldn't say.
And obviously, the FSD stuff that I talked about. I'm kind of surprised that there was no recognition of that, at least to my knowledge so far. We'll see if Tesla talks about that. But certainly interesting.
I am glad to see that the costs continue to come down. Obviously, we'd all love for that to be happening more quickly. But there are still going to be costs that are 4680 related, ramping up of Berlin and Texas in the downtime of Thailand, and all that sort of stuff is going to not super cleanly, but it is going to impact the cogs as well.
All right. Let's hop over to X here, because it sounds like we've got a Cybertruck update. Let's just see. I'm not seeing that yet. I know you're still on Excel. Let me flip you back. So Tesla posted this. Oh, first line. Great reading. Cybertruck production remains on track for later this year with first delivery scheduled for November 30 at Giga, Texas. So we've got about five, six weeks left until Cybertrucks are really in the hands of customers. Super exciting for that milestone. We'll see what else Tesla says here, because obviously, at least as far as I saw this, was not included in the earnings report. Production of 4680s progressing, a lot of Y. Yep, all that stuff we had talked about, and then a couple of images from the deck.
All right. And then as I told you guys, the stock not quite as rebounded as it was before, but right now up 1.8% after hours, which is interesting. Again, for me, I think obviously I was hoping for a little bit better margins. The ASP is not really too far off of what I expected though, so I'm not super disappointed in that. And cost-controlled, I think there's room for further progress. So I'm not too disappointed in the margins. I am probably a little bit more disappointed to hear what Tesla talks about here with their ramps. I can't remember what section that was in. I think here. So again, we're expecting the Model Y production rate in Texas to grow very gradually from the current level. Shanghai, near full capacity, was hoping for Shanghai that with the Highland Model 3 that they would go further, and they may. Doesn't necessarily tell us their exact plans. It's nice to have positive surprises too sometimes. Certainly, the market likes that. But for them to say, near full capacity, we do not expect a meaningful increase, a little bit disappointing. And then the same thing with Berlin. We saw pretty slow ramps this quarter in Berlin and Texas. And obviously, Texas had the downtime, but it just looks like they're taking their foot off the accelerator there on production.
So we'll see. We've talked before. Eventually, the three and the Y are going to top out. We're probably at that point or very close to that point. And that's fine. SNX got us to Model 3. 3 and Y. We're going to get us to Cybertruck, Semi, Next Generation Platform, hopefully FSD, all this stuff that the 3 and Y have funded and are going to continue to fund at these levels. And that's what it's about right now, is funding those things, getting to the next stage.
Tesla's always gone in these plateaus, whether it's the business or the stock price. I mean, you can go back and you can look at it. There are years where Tesla grew deliveries less than 50%. I want to make sure I'm right on that. Certainly revenue growth has oscillated a bit. So we just might be in one of those periods where we're kind of through the early stage of the ramp of these products. And now we're kind of waiting for the early stage of the ramp of the next products. And in five years, maybe those top out. And we're waiting for optimists or something like that. But businesses are cyclical. In hindsight, it looks like a really smooth curve. But as we know with Tesla daily, it's not always that way every day brings something different. So again, it's kind of you got to hold these multiple thoughts in your head, I think at the same time.
All right. Well, I think that's about everything. We got about 45 minutes until the earnings call yet. I might just take a quick look through some of the comments here. Looks like we got a few superjets. Thank you for those. I think my software here actually gives me a way to look at those now, which I'm just noticing. Before I had to kind of scroll through.
Joel, all right. I always love hearing from Joel Sapp. I think my first gold supporter on Patreon ever. So Joel's goes way back. But curious what question you would ask if you could on the call. That's a really good one. I've kind of given up on the say questions. Just with the process being how it is these days. So I haven't really been thinking quite as much about what I would ask. Should've looked at that before. Put that on screen. Let me think about it a little bit more and we'll come back to it.
Chris, thank you. See some people put super stickers. I can't show those on the screen, but appreciate those as well. Mauser, thanks for, calling that out. All right. Just take a quick look and see if there's other questions or comments here. Bradley, thank you for that. Thoughts on FSD, pay per mile billing model? Yeah, we've actually, we've talked about that briefly in the past. I don't know if pay per mile is quite as attractive as just like a monthly subscription. It might be something that's worth trying out, especially because Tesla kind of needs to build that sort of processing if they eventually aspire to have a robust XE fleet. Obviously that would be something that would be booked per mile or per minute or some combination of those things. So, if you've got to build that sort of infrastructure anyway, maybe it's worth offering that to customers too. I think there's viability for that, but not really until it's a case where Tesla's actually taking over their driving responsibility, SANS monitoring. When you're still having to pay attention, I think you're not probably gonna wanna pay per mile as I think just psychologically, people don't probably like that. It's easier if you're paying for time, I think, but I don't think you're gonna pay like a dollar or not a dollar a mile, but whatever, pennies per mile to use autopilot or something like that. But once Tesla or if Tesla starts to take over their responsibility, then sure, that would be I think a great option and people would be very, very happy to pay that. Just sort of on demand as needed for long trips or whatever else.
Julian, thank you, appreciate that. I'm still trying to think of Joel's question here and what question I would ask. I don't know, I mean, one of the things that just kinda like top of mind right now is these production ramps of like, all right, we're heading into 2024 now. Tesla's talked about the 50% compound annual growth rate. Obviously, Elon's response is gonna be, that's a long-term figure, there's gonna be years that maybe are below that. Maybe next year is one of those years. It's kinda what it's looking like right now. And then next generation vehicle happens and then it kinda like spikes back up. That's kinda what I'd expect, but I think just kinda getting the thoughts on like, all right, is Model 3 and Model Y kind of at their peak right now. But again, that's sort of a short-term question in nature, so it's probably not something that I would, you know, if I had one question, it's not what I would ask.
But Bert, thank you, appreciate that. Yeah, I don't know, maybe I'll have a better answer. I answer on that one after the call. All right, just looking through. Lots of nice comments from people, thank you. I appreciate those. Robbie seemed devastated. People always react to me, my demeanor. I just, I don't think people really understand. I'm just not like a, I don't know, I'm not like a, I don't know, I don't know the word, but like super-emotive. I guess like RBF would be a fine way of describing me.
But yeah, that's, I think if you just looked at me every day and there was some bad news that had happened and then you just put it on, you know, next to me and assume that I knew about it, even if I didn't, then you would say I'm devastated, is kind of how I would describe it.
But anyway, people just way, way, way over-read into what they think my emotions are and usually are not even close to correct.
无论如何,人们总是过分推测我情感的含义,而且通常都离真相相差甚远。
Obviously I'm a little bit disappointed in their report. Like I'm not gonna deny that. It's certainly below my expectations. So like, yeah, I would like it to be above my expectations versus below it and if it's below it, then it's gonna be a little bit disappointing coupled with the fact that we've got some updates here on production that are a little bit less than exciting.
So certainly I'm not thrilled about those things, but that's a far, far, far cry from being devastated.
所以,我对这些事情肯定不是很高兴,但这与感到沮丧相差甚远。
Like I said, Tesla's still, they're making a lot of money, lots of lots of money. It's sitting on $26 billion in cash that gives them ample room to spend.
Like I said, $2.4 billion here this quarter on all of these really, really exciting future projects which are no less exciting today than they were yesterday.
So, you know, I'm an owner of Tesla, not just for the Model 3 and the Model Y business lines, right? Like we, I've been saying that these are gonna plateau at some point for quite a while. If we're there, that's fine. You know, this gives Tesla plenty of run rate and capital to get to the next leg, which, you know, it's gonna take some time. We gotta be your super patient, but we will get there and those businesses will be very exciting when they finally come.
Ah ha, throw back to the original unveiling when no one could figure out what this, what this image was. There was so much speculation around that, if you guys remember.
啊哈,回想起最初揭示时,没有人能够弄明白这个,这个图像是什么。大家可能还记得当时对此的众多猜测。
Looks like that's the only update here, but yeah, delivery event for November 30th. Looks like Tesla getting that, you know, those preparations while underway. So exciting to see that.
All right, guys, we'll have a chance to talk again soon. So I think we'll wrap it up here for now. DM, thank you, appreciate that. Yeah, we'll wrap this one up for now.
Let's just take a quick look at, you know, up a little bit less. Not terribly surprised. But I'm glad to see that it's holding up, okay. You know, people hopefully taken it and stride.
Anyway, again, the link for the earnings call, which will start in about 40 minutes, that's down in the description. All, you know, you guys can listen along with me. I'll take notes and things like that. And then we can, you know, talk about what we learned on the earnings call, because right now we don't have the full picture with just the report, and we'll learn a little bit more. And we'll get our first introduction really to our new CFO. So excited about that.
All right, that'll wrap it up for today, as always. Well, no, that'll wrap it up for this episode. As always, thanks for listening. Find me on XAT Tesla podcast, and we'll see you in a bit for the earnings call. Thank you.