Tesla filing shows US sales tumbled 39% in third quarter

Tesla filing shows US sales tumbled 39% in third quarter

Tesla filing shows US sales tumbled 39% in third quarter

Tesla Inc.'s surprise profit in the third quarter came despite a drop of nearly 40% in revenue from customers in the United States - its largest market.

According to Tesla's filing, the company's revenues in the United States fell to US$3.127 billion for the third quarter, down from US$5.133 billion for the same period past year. While sales in China - the world's largest auto market - rose to US$699 million from US$409 million, a category known as "other" - which includes several countries - grew to US$1.8 billion from US$784 billion.

According to Philippe Houchois, managing director of automotive equity research at Jefferies, Tesla's lower registrations in August and September in the USA are not surprising at all, given that federal income tax credits available to anyone who purchases a new Tesla Model S, Model X, or Model 3 dropped to US$1,875 effective July 1, 2019, from the US$3,750 tax credit until June 30.

In its earnings report earlier this month, Tesla reported a almost 8 per cent drop in total revenue to US$6.30 billion, missing analysts' average estimate of US$6.33 billion, according to IBES data from Refinitiv. It did not break down sales by geography in the report. Tesla reported last week that global deliveries for the quarter rose a higher-than-expected 1.9% to 97,000 vehicles, though most of that growth came from sales of the Model 3 - its lowest-profit-margin vehicle.

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The sudden drop in domestic sales in the latest quarter compares with a 55 percent rise in the second quarter which ended in June.

Tesla is expanding its service in other markets including China and Europe, as Musk is under pressure to make Tesla sustainably profitable, while still spending on major initiatives ranging from a Shanghai factory and assembly-line to upcoming models such as the Model Y SUV and a Semi commercial truck.

The third quarter of 2019 has been a good one for Tesla, as the company managed to post a profit of US$143 million after seeing red in Q2 and Q1 previously.

Roth Capital analyst Craig Irwin, who downgraded the stock to "sell" from "neutral", stated that he sees the firm's current margins as unsustainable.

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