2 Big Highlights From Tesla's Q3 Earnings Call

Tesla's (NASDAQ: TSLA) earnings calls may be many things, but "dull" is never one of them.

Its third-quarter earnings call on Wednesday was no exception. Here are the two big highlights from that unique session.

Record revenue, slumping margins

Tesla had already reported robust electric vehicle (EV) delivery numbers for the quarter, so the company's record quarterly revenue of $28.1 billion came as no surprise. Its profit margin, on the other hand, was stunning, and not in a good way. Operating margin slipped by 5 percentage points year over year, from 10.8% in Q3 2024 to just 5.8% this time.

This problem is likely to intensify in future quarters due to Congress' decision to end the $7,500 federal EV tax credit in the U.S. and Tesla's introduction of cheaper versions of its Model 3 and Model Y. The company's R&D expenses for its robotics and autonomous driving initiatives may also eat into its profitability. Meanwhile, Tesla predicted that it won't significantly ramp up production of its electric Semi until late 2026 (and the company's forecasts about such targets are historically unreliable).

Image source: Tesla.

Musk really, really wants your vote

It's incredibly rare for a CEO to discuss their proposed pay package on an earnings call. Then again, it's also unheard of for a company to run ads urging shareholders to vote in favor of one. Tesla has now shattered both those norms to promote CEO Elon Musk's proposed compensation package, which goes to a shareholder vote on Nov. 6.

"We don't even want to call it a compensation package," said CFO Vaibhav Taneja, explaining that this is because Musk plans to keep the shares he would receive under it to increase his stake in the company and establish more voting control.

Musk anticipates that the shares this agreement would net him would raise his stake in Tesla from 13% to a percentage in the mid-20s. This, he said, would give him "enough voting control to give a strong influence, but not so much that I can't be fired if I go insane." It would also address what Musk called his "fundamental concern":

If I go ahead and build this enormous robot army, can I just be ousted at some point in the future? That's my biggest concern ... if we build this robot army, do I have at least a strong influence over that robot army, not current control, but a strong influence? That's what it comes down to in a nutshell. I don't feel comfortable wielding that robot army if I don't have at least a strong influence.

I'm not sure that "I want more control over my robot army" is the best argument you could use to convince people to give you more company stock, but it's certainly unique. However, some shareholder advocates -- including proxy advisory firms ISS and Glass Lewis -- have already come out against the pay package. Musk had harsh words for them on the call, referring to them as "corporate terrorists" who "have no frigging clue" -- both phrases that also may be earnings call firsts.

I actually think the proposed compensation package is probably good for shareholders because of its milestone-based incentives, which ensure that Musk won't get the control he craves unless he delivers on key innovations and performance metrics. But the company's tumbling margins mean Tesla shareholders may be in for a rough ride in the near term.

John Bromels has positions in Tesla. The Motley Fool has positions in and recommends Tesla. The Motley Fool has a disclosure policy.