Tesla disappointed investors with its Q3 earnings report, missing on top-line, bottom-line, and margins as the company’s focus on reducing cost (and price) per vehicle impacted the numbers:

• Tesla 3Q Adj EPS 66c, Est. 74c

• Tesla 3Q Rev. $23.4B, Est. $24.06B

• Tesla 3Q Gross Margin 17.9%, Est. 18%

Though arguably, maintaining margins amid this massive price war is noteworthy (though it was down from 25.1% a year ago).

Revenue was impacted by the following items:

+ growth in vehicle deliveries
+ growth in other parts of the business
– reduced average selling price (ASP) YoY (excluding FX impact)
– negative FX impact of $0.4B

Free cash flow disappointed at $848 million, well below the estimate of $2.59 billion.

And TSLA still sees production 1.8 million vehicles this year (in line with the estimate of 1.82 million).

A positive spin was offered as Tesla said they had more than doubled the size of their AI-training compute.

We have more than doubled the size of our AI training compute to accommodate for our growing dataset as well as our Optimus 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.

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. Our large installed base of vehicles continues to generate anonymized video and other data used to develop our FSD Capability features.

And an additional highlight is that Tesla says that “Cybertruck deliveries begin in November 2023” but without a lot of context as to what kind of volume we are talking about here.

TSLA shares initially puked on the miss, but bounced back to unchanged from the close…

Though TSLA was down around 5% on the day amid an ugly market.