Tesla's AI dream supports a market cap of 8.5 trillion

•    Financial report performance: ◦    Impressive revenue: Revenue reached $28.1 billion, exceeding market expectations by nearly $2 billion, a 12% year-on-year increase, with deliveries hitting a new record of 497,000 vehicles and free cash flow surging to $4 billion. ◦    Profit concerns: Adjusted earnings per share were $0.50, below the expected $0.54; excluding government environmental subsidies, the actual gross margin was less than 5%. The profit reduction stemmed from the expiration of the electric vehicle tax credit policy, a surge in orders before the quarter-end boosting revenue, while tariff costs in Q3 increased to $400 million, and carbon credit income declined, squeezing profit margins. •    Market outlook and response: ◦    Expected decline in deliveries: Industry forecasts predict Tesla's global deliveries will start declining from Q4, with a noticeable drop by 2026. If the U.S. follows Germany's example of subsidy cuts, EV sales could halve. ◦    Vehicle strategy: Tesla launched stripped-down models priced at $37,000 and $40,000, but these models have slow charging and low configurations, making them less cost-effective compared to similarly priced gasoline cars. ◦    Industry trend: Wall Street predicts a cooling global EV market next year, with Tesla, as the industry leader, facing significant impacts, as its car-selling business profitability shows a downward trend. •    Market cap support and signals to watch: ◦    Market cap support: What's currently propping up Tesla's market cap isn't its car business but three AI-related "stories": the Optimus robot, autonomous taxis, and energy storage.

Below is an extract from the video "Tina Doesn't Want to Step on a Landmine":

•    Tesla's latest financial report shows record revenue, with free cash flow reaching $4 billion, but the stock price fell after hours. •    Revenue of $28.1 billion exceeded market expectations by nearly $2 billion, a 12% year-on-year increase, with deliveries hitting a new record of 497,000 vehicles. However, excluding government environmental subsidies, the actual gross margin was less than 5%, and adjusted earnings per share of $0.50 fell short of the expected $0.54, indicating reduced profits. •    Reasons for profit decline: The electric vehicle tax credit policy expired at the end of September, leading to a surge in orders before the quarter-end boosting revenue; Q3 tariff costs increased to $400 million, $100 million more than Q2; carbon credit income declined. •    Industry forecasts predict Tesla's global deliveries will start declining from Q4, with a more noticeable drop by 2026. The U.S. may follow Germany's example of subsidy cuts, which halved EV sales. •    Tesla launched stripped-down models priced at $37,000 and $40,000, but these models have slow charging and low configurations, making them less cost-effective compared to similarly priced gasoline cars. •    Wall Street predicts a cooling global EV market next year, with Tesla's car-selling business profitability showing a downward trend. •    What's propping up Tesla's market cap are three AI-related "stories": the Optimus robot, autonomous taxis, and energy storage. These businesses currently generate no substantial profits, and investors are betting on Elon Musk to work another miracle. •    Two key signals to watch: First, when Robotaxi achieves unsupervised operation; second, the outcome of the November shareholder vote on Musk's massive compensation package. If approved, shareholders are willing to bet on Tesla's $8.5 trillion market cap future. Long-term stock performance depends on whether Musk can break through competition from GM, Waymo, and others to unlock Tesla's AI potential.