[Earnings Preview] Tesla Q3 earnings are here! After the disappointment sell-off of Robo-Taxi, will the stock price turn positive on performance?

As seen in the chart above, customer deliveries growth has decelerated since the fourth quarter of 2022. Despite multiple price cuts due to decreased demand and price wars, sales have not shown significant improvement, resulting in further shrinking profits for the automotive segment.

Analysts at Zacks expect Tesla's automotive segment revenue for the third quarter to increase by 13.1% year-on-year to $22.190 billion, but high production costs and price competition continue to squeeze profit margins, with a gross profit margin of 18.3%, a 40% decrease from the same period last year.Analysts at Zacks expect Tesla's automotive segment revenue for the third quarter to increase by 13.1% year-on-year to $22.190 billion, but high production costs and price competition continue to squeeze profit margins, with a gross profit margin of 18.3%, a 40% decrease from the same period last year.Analysts at Zacks expect Tesla's automotive segment revenue for the third quarter to increase by 13.1% year-on-year to $22.190 billion, but high production costs and price competition continue to squeeze profit margins, with a gross profit margin of 18.3%, a 40% decrease from the same period last year.Analysts at Zacks expect Tesla's automotive segment revenue for the third quarter to increase by 13.1% year-on-year to $22.190 billion, but high production costs and price competition continue to squeeze profit margins, with a gross profit margin of 18.3%, a 40% decrease from the same period last year.be predicted to be as weak as in July.

During the previous quarterly earnings call, Elon Musk, Chief Executive Officer (CEO), stated that discounts on electric vehicles are putting Tesla in a difficult situation, but he believes it is a short-term issue.The company, planning to offer a budget model in the first half of next year, is currently rushing to cut costs.

Will the growth in the energy business continue?
In Tesla's Q2 energy generation and storage business, the introduction of 9.4GWh of energy was driven by increased demand for Powerwalls and Megapacks. Revenue doubled from the same period of the previous year, reaching $3.14 billion, marking a significant surprise in the second-quarter results.

Tesla's energy storage deployment in the third quarter increased by 73.3% compared to the previous year, reaching 6.9GWh, with its revenue reaching $2.17 billion, a 39.1% increase from the same period last year.The revenue reached $2.17 billion, a 39.1% increase from the previous year's third quarter, as energy storage deployment in Tesla's third quarter increased by 73.3% compared to the previous year, reaching 6.9GWh.As analysts on Wall Street predict.

Zacks analysts have stated that the company's energy business is on a strong growth trajectory and will become the business with the highest profit margin for the company. On the other hand, as management mentioned the volatility of energy adoption, HSBC warns that performance may significantly fall below Wall Street's estimates.

The Future of 'Robo-Taxis'?
CEO Elon Musk has explicitly stated his intention to make self-driving taxi 'Robo-Taxis' a core part of the long-term strategy. However, although the announcement event was spectacular as a show, it was perceived as lacking substance from a business perspective. The lack of detailed short-term product roadmap, mention that 'production start date depends on regulatory approval', and no information related to the expected affordable model 'Model 2' led to investor disappointment and selling pressure.

Compared to rivals working on self-driving taxis, Tesla's advantage lies in the ability to collect and utilize a massive amount of driving data from millions of its own EVs. In all driving scenarios, Tesla can improve its autonomous driving technology by utilizing this vast amount of driving data. This will ultimately become the true differentiating factor.

In the long run, Tesla has finally embarked on the next growth trajectory, but investors will have to wait a few more years before the company's growth and profits directly correlate. During this time, investors should focus on the progress of other growth sectors such as the company's energy storage.