Thoughts on earnings call.

[YDR37]

You need to understand what you are talking about before telling others they are ill-informed.

The only statement of yours that I suggested was “ill-informed” was your claim about Tesla’s gross automotive profit – which you, in fact, overstated about $1.5 billion, right? No biggie, we all make mistakes sometimes.

Your homework is to look up the meaning of "pricing power" and how that relates to competitiveness. Tesla has the most pricing power in the automotive business (excluding low-volume specialty brands with huge markups). Pricing power defines competitiveness.

Your homework is to figure out why, with all their “pricing power” and “industry leading margins” and “competitiveness”, Tesla’s gross automotive profits in 3Q 2025 were lower than in 3Q 2024 – despite selling more vehicles.

Going forward (to me) means looking at more than the profits in the next 90 days

This thread is about the 3Q 2025 earnings call (check the title). Since the call was actually in 4Q 2025, it seems reasonable to consider the current quarter as well. If you want to post (at length) about AI, robotics, and other aspects of Tesla’s business that have a potential long-term impact beyond 4Q 2025, maybe start another thread.

Teslas realistic current production capacity is somewhere around 2.7 million per year (not counting the Tesla Semi and Cybercab lines which are still being constructed). As that production capacity is fully utilized, Tesla's competitiveness will be untouchable.

Tesla only produced about 1.7 million vehicles over the past four quarters. By your own capacity estimate, the factories are only running at about 63% utilization. You are trying to sell this as a positive.

But go back and study how cars made in one quarter, and sold in the following quarter, are represented in the financials when it comes to profits. You have some serious misunderstandings there

I’ll take your word for it. I’m not actually too concerned about the technical accounting definition of cash flow in the automotive industry. I’m concerned that Tesla had record vehicle sales in 3Q 2025, cleared out inventory -- and somehow, made less gross automotive profit than in 3Q 2024.

What are automotive profits going to look like when vehicle sales fall? Like what’s happening right now?

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[YDR37]

People still have no idea just how many trillions of dollars autonomous driving is worth lol. Not only will robotaxi, robovan, and eventually a cargo robo-carrier completely eclipse individual sales of vehicles, but we will look back on day and laugh that we privately owned them in the first place.

I think you are just expecting an unreasonable timeframe for all of this to transpire.

If you think I am unreasonable about self-driving vehicle timelines, what do you think about this guy's track record?

 

[CyberGus]

I think Gus was trying to say fewer cars needed (with autonomy) was a problem for Tesla's profitability or auto sales going forward (correct me if I'm wrong Gus).

I take issue with irrational exuberance of "autonomy is worth trillions! Trillions, I say!"

Uber and Lyft riders paid $200B last year. Even if Tesla wipes them out completely with Robotaxi, they won't generate "trillions", and unlike the rideshares they must invest capital into the vehicles themselves. And this assumes there we be no competition, which is always temporary even when true initially.

It's true that with autonomy, we need fewer vehicles. Globally, that means fewer auto sales. But the genius of autonomy is the recurring revenue, which is a better model than a one-time sale.

It's a great business opportunity for Tesla, but it's not "trillions", and certainly not anytime soon.

The subject reminds me of the early EV-naysayers, claiming that swapping ICE for EV is "more expensive" because you're throwing away a perfectly good car. Sure, if you throw it in a volcano, but used cars are sold for their residual value. That increases supply, providing downward pressure on prices. It's a market.

 

[HaulingAss]

I take issue with irrational exuberance of "autonomy is worth trillions! Trillions, I say!"

Uber and Lyft riders paid $200B last year. Even if Tesla wipes them out completely with Robotaxi, they won't generate "trillions", and unlike the rideshares they must invest capital into the vehicles themselves. And this assumes there we be no competition, which is always temporary even when true initially.

It's true that with autonomy, we need fewer vehicles. Globally, that means fewer auto sales. But the genius of autonomy is the recurring revenue, which is a better model than a one-time sale.

It's a great business opportunity for Tesla, but it's not "trillions", and certainly not anytime soon.

The subject reminds me of the early EV-naysayers, claiming that swapping ICE for EV is "more expensive" because you're throwing away a perfectly good car. Sure, if you throw it in a volcano, but used cars are sold for their residual value. That increases supply, providing downward pressure on prices. It's a market.

Good point on it being "a market". That also applies to investors who want to get in on profits relating to AI and autonomy. Those who want to take part near the ground floor will have to pay a big premium because so many would like a piece of it what they see will be a massive disruption. Others don't think it will amount to much or ever be worth trillions. Hence, a market is made, at the prices investors are willing to buy or sell at.

I haven't calculated the potential annual revenues/profits of a successful global robotaxi service, but the "trillions" Musk alluded to were, I believe, in reference to the market value attributed to Tesla, not annual profits.

I take issue with irrational exuberance of "autonomy is worth trillions! Trillions, I say!"

Uber and Lyft riders paid $200B last year. Even if Tesla wipes them out completely with Robotaxi, they won't generate "trillions", and unlike the rideshares they must invest capital into the vehicles themselves. And this assumes there we be no competition, which is always temporary even when true initially.

Uber achieved a net profit last year of $9.856 billion dollars. And that was while paying nearly 17 million human drivers, even if many of those drivers did not complete many paid rides. That number is probably down around 7 million regular drivers. Most of the rides were done in internal combustion vehicles. There was high driver turnover, drivers are a major cost for the company. This high cost structure means the service is priced high enough that it dissuades most rides. It's cheaper to drive yourself, if you have a car.

It's a well-known fact that as the price of a service drops, it hits the critical mass needed for widespread adoption. With widespread autonomous EVs, the price will drop dramatically. Rather than ride-hailing being used as an emergency or occasional service, the price will be low enough that the number of total rides will 100X or more. That will turn that $200 billion market into a $20 trillion or more market.

Currently, ride-hailing is not very available in most small towns and rural areas. Cheap autonomous EVs will change that. Cheap, convenient and timely autonomous EVs will cause grocery and restaurant food deliveries to explode. The convergence of three technologies, instant Internet communication, cheap EV miles, and AI driving means beyond any reasonable doubt that we will live in an age of instant cheap and convenient transportation for anything that you want or need in the moment. This is a given.

But which company to invest in? I always go with the most likely winner, in this case the company that wisely focused on developing safe and affordable autonomy. Tesla is the first company that will have a lower cost structure than the current players in autonomy and ride-hailing. The barriers to entry are very high, short of licensing FSD from Tesla (assuming Tesla wants to license it).

Nothing in life is a certainty but, as an investor, I invest in things that are as near a certainty as possible. I've been doing this for over 30 years. I invested in PC software in the early 1990's and made a killing. I invested in the growth of Starbucks in the same timeframe and made a killing. I invested in the transition to CDMA wireless technology in the mid-late 1990's at a time when all the big players were swearing on their mother's Bible that it was a dead-end technology, and made a killing (all cellular is now based on spread-spectrum CDMA technology that was supposedly going nowhere).

The winning strategy is to not invest in things that probably won't happen. It's tough to have good investment returns if you invest in dead-end companies and technologies (even if you also have some successes). But the adoption of new technologies follows practical considerations like cost and convenience to consumers. I don't invest in the latest battery technologies in the lab because I don't know how long it will take to get out of the lab or whether it will be cost-effective enough for widespread adoption. I invest once I have visibility that the risk/reward ration is strongly on my side. And I have very few significant losses, that is technologies or trends that I went in on big and lost. Don't do that.

I followed Tesla from the time it was known they were going public (around 2008 or 2009, IIR). I wanted to invest in EVs but I had to abstain because, IMO at the time, the risk of Tesla being squashed by much bigger monied interests was too great. The risk of 100% loss of capital was too great. It would have turned out awesome, but the risk profile was too large. Musk did an amazing thing. By early 2019 the risk/reward was too good to pass up. That's when I invested, most of it at a price of $12 and change per share. I didn't hope it would turn out in my favor, the numbers and trends told me it would. There was a certain amount of execution risk, but the numbers were strongly in my favor. I was unlikely to lose my principle and the profit potential was too compelling to pass up.

This post became longer than I expected. I really just wanted to say that autonomy will dramatically expand the ride-hailing market in ways that are difficult for most people to even comprehend now. That part is as close as it ever gets to a sure thing, due to the convergence of enabling technologies. And Tesla is the likely biggest winner, because they have the most cost-effective and scalable solution. They cannot be upstaged at the last minute because it requires years and access to billions of dollars of compute. In other words, we have visibility on all the potential players, this is what makes it such a compelling investment. I didn't mention safety because everyone who deploys autonomous vehicles will have to prove safety, they will need to be at least as safe as human drivers or they will be yanked off public roads before they do further damage. And Tesla is damn close to that right now.

My question to you: Do you have good reason why the ride-hailing market won't expand dramatically when the availability and timeliness increases and the cost declines dramatically?

 

[REM]

If you think I am unreasonable about self-driving vehicle timelines, what do you think about this guy's track record?

An entire table filled with "I think", "Hopefully", "maybe", "if we are lucky"

and you seem to think these are meant to me understood as "Elon promised me".

 

[REM]

It's a great business opportunity for Tesla, but it's not "trillions", and certainly not anytime soon.

I really have a chuckle at the number of people who don't seem to have a sense of scale that Robotaxi will be operating at lol.

Optimus will be a passenger for cargo deliveries too. Most people don't even consider that part.

 

[TraileringButtocks]

(all cellular is now based on spread-spectrum CDMA technology that was supposedly going nowhere).

No, it isn't. 4G and 5G are based on Frequency Division Multiplexing. One reason being the CDMA receiver is much more complicated because you need to pick signals out of the noise floor, coherently. FDMA is much simpler -- you can simply "throw digital logic" at the problem (Moore's Law, etc.). (CDMA had a good run for "2.5G" -- what we called it at the time -- and 3G though.)

 

[HaulingAss]

The only statement of yours that I suggested was “ill-informed” was your claim about Tesla’s gross automotive profit – which you, in fact, overstated about $1.5 billion, right? No biggie, we all make mistakes sometimes.

You got me there, it shouldn't have had "automotive" before the "gross profit".

Your homework is to figure out why, with all their “pricing power” and “industry leading margins” and “competitiveness”, Tesla’s gross automotive profits in 3Q 2025 were lower than in 3Q 2024 – despite selling more vehicles.

That's because Tesla used some of their pricing power to deal with increasing competition while expanding auto sales to a new record. That's what pricing power is for! The competition was selling their EVs at anywhere from near break-even to large losses. That matters.

This thread is about the 3Q 2025 earnings call (check the title). Since the call was actually in 4Q 2025, it seems reasonable to consider the current quarter as well. If you want to post (at length) about AI, robotics, and other aspects of Tesla’s business that have a potential long-term impact beyond 4Q 2025, maybe start another thread.

Ummm, no. I'll discuss the long-term implications of the information contained in the Q3 quarterly report right here. Thank you.

Tesla only produced about 1.7 million vehicles over the past four quarters. By your own capacity estimate, the factories are only running at about 63% utilization. You are trying to sell this as a positive.

At the risk of stating the obvious, the current strong margins with only 63% utilization, is a net positive. It means their margins will have a strong positive tailwind as they more fully utilize their installed production capacity. Production capacity is a valuable asset, especially so with autonomy on the verge of going wide. I shouldn't have to say this.

I’ll take your word for it. I’m not actually too concerned about the technical accounting definition of cash flow in the automotive industry. I’m concerned that Tesla had record vehicle sales in 3Q 2025, cleared out inventory -- and somehow, made less gross automotive profit than in 3Q 2024.

Your concerns are misplaced (and I've previously detailed the reasons why).

What are automotive profits going to look like when vehicle sales fall? Like what’s happening right now?

I'll entertain your question even though it's baffling why you are so focused on automotive margins at this point in Tesla's history. I see nothing troubling with the recent trend to lower auto margins since it's well understood why they have fallen off their highs in recent quarters. The important thing is they are still very good relative to the rest of the industry. That implies they still have a lot of pricing power.

If sales are lower marginally lower in Q4, as I suspect they will be, then margins could also be marginally lower. But margins normally fluctuate up and down, there are bigger impacts to margins than pure volume, especially when we are not looking at a complete collapse in sales (like much of the media would have you believe).

If Tesla needs to exercise some of their pricing power to keep production humming relatively consistently, then margins will be impacted in a negative direction. Demand for their vehicles, and competitor pricing, will likely be the most important factors with regard to margins. But margins can also be impacted by other things out of Tesla's control (and impossible for us to guess at this point in time), things like cost of raw materials, import tariffs on parts, currency fluctuations, etc. etc. etc.

I would be more worried about falling margins if that trend was due to things within Tesla's control. Because that would imply they were going backwards in terms of constantly refining and improving the efficiency of production, which is largely what gives them their pricing power advantage over their competitors. There is little Tesla can do about fluctuations in the macro environment. It's almost like you are using those fluctuations to try to identify something that's not there. I believe in being rigorous when analyzing potential negative developments that could impact my long-term thesis but, IMO, this is not it.

I think, from an investor standpoint, you are looking at the wrong things at the wrong time. Meaning the least important things to the actual value of Tesla.

 

[hemiarch]

You got me there, it shouldn't have had "automotive" before the "gross profit".



That's because Tesla used some of their pricing power to deal with increasing competition while expanding auto sales to a new record. That's what pricing power is for! The competition was selling their EVs at anywhere from near break-even to large losses. That matters.



Ummm, no. I'll discuss the long-term implications of the information contained in the Q3 quarterly report right here. Thank you.



At the risk of stating the obvious, the current strong margins with only 63% utilization, is a net positive. It means their margins will have a strong positive tailwind as they more fully utilize their installed production capacity. Production capacity is a valuable asset, especially so with autonomy on the verge of going wide. I shouldn't have to say this.



Your concerns are misplaced (and I've previously detailed the reasons why).



I'll entertain your question even though it's baffling why you are so focused on automotive margins at this point in Tesla's history. I see nothing troubling with the recent trend to lower auto margins since it's well understood why they have fallen off their highs in recent quarters. The important thing is they are still very good relative to the rest of the industry. That implies they still have a lot of pricing power.

If sales are lower marginally lower in Q4, as I suspect they will be, then margins could also be marginally lower. But margins normally fluctuate up and down, there are bigger impacts to margins than pure volume, especially when we are not looking at a complete collapse in sales (like much of the media would have you believe).

If Tesla needs to exercise some of their pricing power to keep production humming relatively consistently, then margins will be impacted in a negative direction. Demand for their vehicles, and competitor pricing, will likely be the most important factors with regard to margins. But margins can also be impacted by other things out of Tesla's control (and impossible for us to guess at this point in time), things like cost of raw materials, import tariffs on parts, currency fluctuations, etc. etc. etc.

I would be more worried about falling margins if that trend was due to things within Tesla's control. Because that would imply they were going backwards in terms of constantly refining and improving the efficiency of production, which is largely what gives them their pricing power advantage over their competitors. There is little Tesla can do about fluctuations in the macro environment. It's almost like you are using those fluctuations to try to identify something that's not there. I believe in being rigorous when analyzing potential negative developments that could impact my long-term thesis but, IMO, this is not it.

I think, from an investor standpoint, you are looking at the wrong things at the wrong time. Meaning the least important things to the actual value of Tesla.

Somebody needs to put this stuff in a ring-binder for you @HaulingAss

 

[HaulingAss]

No, it isn't. 4G and 5G are based on Frequency Division Multiplexing. One reason being the CDMA receiver is much more complicated because you need to pick signals out of the noise floor, coherently. FDMA is much simpler -- you can simply "throw digital logic" at the problem (Moore's Law, etc.). (CDMA had a good run for "2.5G" -- what we called it at the time -- and 3G though.)

This is getting far off-topic, but maybe rather than saying current cellular tech was "based" upon CDMA, it would have been better to say both 4G and 5G still utilize important elements of spread spectrum CDMA technology, particularly in the uplink transmission.

In 4G LTE, the uplink uses Single Carrier Frequency Division Multiple Access, a hybrid approach that incorporates discrete Fourier transform spreading to reduce the peak-to-average power ratio, drawing on spread-spectrum principles similar to those in CDMA for power efficiency and single-carrier-like characteristics.

In 5G, the uplink optionally uses DFT-spread OFDM, which is functionally equivalent to SC-FDMA and also employs spreading techniques akin to CDMA to achieve low PAPR and better power amplifier efficiency.

These spreading elements enable better performance in mobile devices by mimicking aspects of CDMA's single-carrier transmission while maintaining orthogonality for multiple access.

 

[HaulingAss]

Somebody needs to put this stuff in a ring-binder for you @HaulingAss

Why? Maybe they should put it in a ring-binder for themselves! I haven't used a ring binder for decades.

 

[hemiarch]

Why? Maybe they should put it in a ring-binder for themselves! I haven't used a ring binder for decades.

It’s just memorable. I don’t mean that in any offensive way. Love reading your posts.

 

[rjmcinnis]

I laugh at all the exuberance of how autonomy will be worth trillions. To who? Job markets are going to collapse and people will be more interested in food than in automation.

Sure hope I'm wrong, or that it at least doesn't happen in my lifetime.

 

[baska]

Just finished listening to the call and I’m cautiously optimistic — a few strong numbers, but still a lot of moving parts. The guidance was decent, but I’m waiting to see how they execute on production and cost control before getting too bullish. On a side note, I’ve been digging into Devere Group reviews lately for broader financial perspective, and it’s reminded me how important it is to look beyond the headline figures.

 

[Mikec3399]

Agreed

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