Tesla Inc.’s surprise profit in the third quarter came despite a drop of almost 40% in revenue from customers in the United States — its largest market.
The electric automaker’s U.S. sales plummeted to $3.13 billion in the latest quarter, down from $5.13 billion in the year-earlier quarter, according to a securities filing Tuesday. 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.
Although it was known that the automaker was emphasizing global expansion last quarter, the document adds clarity to the extent of the regional shift. The United States, China, the Netherlands and Norway have long been the biggest markets for the company’s all-electric cars. While sales in China — the world’s largest auto market — rose to $699 million from $409 million, a category known as “other” — which includes several countries — grew to $1.8 billion from $784 million.
Tesla also said in Tuesday’s filing that it reduced costs due to manufacturing efficiencies and unspecified “commercial negotiations with suppliers.” Panasonic Corp., which makes battery cells for Tesla and is the company’s largest supplier, didn’t respond to a request for comment.
At least one analyst was unimpressed. Craig Irwin, an analyst at Roth Capital Partners, downgraded Tesla to “sell” from “neutral” over concerns that the automaker’s gross margins are unsustainable. Roth has a $249-a-share price target on the stock.
“The filing from Tesla shows warranty adjustments and other one-time items are a large driver of perceived strength,” Roth said in a note Tuesday. The company got a one-time $55-million benefit in part by reversing certain warranty provisions, he said.
Tesla shares fell 3.5% on Tuesday to $316.22.