Tesla Q3 Earnings Estimates
With Tesla’s Q3 earnings just around the corner, speculation is heating up. Matt Smith from Rebellionaire has laid out his Tesla Q3 earnings estimates, estimating an adjusted earnings per share (EPS) of $0.58. But the story behind that number? It’s packed with insight. Let’s break down Matt’s key assumptions and see what we should be paying attention to when those numbers hit.
FSD Revenue: The Secret Sauce No One's Talking About
Full-Self Driving (FSD) is the elephant in the room for Tesla’s Q3 results, and Matt is betting big on its impact. Tesla hasn’t been overly generous with details about how much it’s making off FSD, but Matt points to three streams of revenue that deserve a closer look:
Deferred Revenue: As Tesla rolls out more FSD features, they can start recognizing revenue that was deferred from earlier sales.
New FSD Sales: Straight-up cash from FSD packages sold during the quarter.
FSD Subscriptions: The recurring revenue from monthly subscribers who prefer FSD as a service.
Together, Matt estimates these could pull in about $544 million this quarter. It’s a bold call, especially since Tesla hasn’t confirmed any of these numbers. But here’s the kicker: If Tesla finally pulls back the curtain on FSD subscriptions—like giving us subscriber counts or take rates—it could be a game changer for investor confidence. We’re talking about FSD becoming a sustainable margin powerhouse if those numbers are as promising as Matt suggests.
Automotive Margins: A Balancing Act
Tesla’s gross margins are always a hot topic, and Matt’s got a few things to say about what could swing them this quarter.
On the upside, higher production, particularly of the new 4680 batteries, more efficient factory operations, and currency fluctuations are all positives. More cars built, fewer expenses, better margins—simple enough, right? But the plot thickens. There are some serious headwinds, too. The product mix, especially with Cybertruck ramping up (and having slimmer margins at first), fewer regulatory credits, and Tesla’s sweet promotional financing offers might drag those margins down.
The end result? Matt sees automotive gross margins dipping slightly, from 18.5% last quarter to 17.7% in Q3. That drop is mostly because of fewer regulatory credits, though. If you take those out of the equation, Tesla’s margins are actually improving by 110 basis points. That’s a sign the core business is still solid—even with all the juggling Tesla’s doing with its product lineup.
Energy Revenue: Why a 27% Deployment Drop Isn’t as Bad as It Looks
Tesla’s energy business can be tricky to predict—there’s a lot of variability in project timelines and deployments. Case in point: Energy deployments are down 27% this quarter. Ouch, right? But Matt sees a silver lining. He’s only projecting a 16% drop in energy revenue because of how Tesla recognizes that revenue. It’s tied to hitting certain milestones on long-term projects, so the revenue stream tends to be smoother than deployments might suggest.
Matt’s calling for 23% gross margins in the energy division, though he wouldn’t be shocked if it came in a little higher depending on how those projects wrap up. It’s a good reminder that, while the energy side of the business is still small compared to automotive, it’s worth keeping an eye on how this space evolves over time.
Services and Costs: Steady Growth, Steady Spending
Beyond FSD and automotive, Matt projects modest growth in Tesla’s services segment, expecting a gross margin of around 6.7%. When it comes to operating costs, he’s pegged them at $2.5 billion for the quarter. Add that up, and Matt’s expecting net income of $1.64 billion, or $0.47 per share. Adjustments for one-off items get us to that $0.58 adjusted EPS estimate, which is the number most investors are focused on.
What We’re Really Watching in Tesla’s Q3 Report
At the end of the day, Matt’s analysis gives us a clear roadmap for what to look out for when Tesla drops its Q3 earnings. FSD is clearly a huge factor, especially if Tesla decides to throw us a bone with more detailed subscription numbers. The automotive division looks stable, even with a few bumps along the way, and energy remains a wildcard with potential upside.
As usual, Tesla keeps us guessing. But if Matt’s numbers are even close to the mark, there’s plenty of reason for optimism. Now, we just have to wait and see if Tesla delivers on the hype—because with Tesla, there’s always hype.
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