Tesla's automotive fundamentals remain excellent. Do not be distracted by the visible numbers for Q3.
Most importantly, Tesla still really hasn't achieved economies of scale yet. Total gross margin was still 18% but net margin was only 8%, due to opex eating up 40% of the gross profit. Plus, much of that opex was going towards development of Optimus, Dojo, and new businesses like virtual power plants. At 10M+ vehicles per year kind of scale, there should be much more operating leverage. And they're still shipping cars very long distances, on average, which will be greatly mitigated in the future with more factories each serving smaller regions.
There also is consistent variability from foreign exchange because Tesla does not hedge for this. In Q3, it was a $400 million headwind. However, the long-term average effect of forex fluctuations is likely to be roughly 0, so this should be factored out when analyzing a single quarter.
Tesla's global average automotive unit economics are depressed, have been depressed, and will continue to be depressed by the explosive production growth curve, for several reasons. This implies that whenever growth slows down and the automotive business is no longer in startup mode, the latent, underlying economics will show through.
1) For as long as Tesla is expanding quickly, new production lines will constitute a large portion of total production. These factories still haven't reached maturity yet. This was noted on the front page of the Q3 deck: "...production cost at our new factories remained higher than our established factories...". In Q3 this effect was especially pronounced due to Shanghai, the most profitable and efficient plant, being shut down, which removed it from the global production mix, and then beginning low-rate initial production of M3 Highland, which effectively turned it too into a partially new factory with temporarily higher costs per unit.
2) The fleet is young. As Elon has noted on an earnings call a few years ago, historically most OEMs have made most of their profit not on initial sale, but instead on out-of-warranty replacement parts and financing. Tesla, being new and rapidly growing, does not get this benefit (yet). For the average Tesla car, the total lifetime profit for Services & Other has mostly not occurred yet, but savvy investors should consider the net present value of these expected future cash flows instead of fixating on the economics of the initial sales and early years of vehicle life, which is all that is currently showing in the financial reports. Almost all Tesla vehicles in existence are still under warranty, and the current fleet still has lots of $$ for Supercharging, premium connectivity, insurance and FSD still waiting to accrue over time.
3) Tesla's vehicle ASP is continually depressed by competition. Not so much because the competitors are competently competing, but more so because they are willing to sell their EVs for big losses. Tesla's aggressive growth is, at times, outpacing the growth of demand for Tesla cars, and that demand exists in a market where the competitors are essentially compensating for their inadequacy by giving up and hoping their costs will massively improve in the future. The huge losses are subsidized either by investment capital (e.g. Rivian) or ICE profits (legacy OEMs). Obviously, this is a transient market situation which is unsustainable in the long run, and therefore it is not representative of where things are headed in the 2030s and beyond. The competition still has not shown anywhere close to the degree of cost control (and the engineering behind it) that Tesla has shown, and the gap is likely to widen with mature 4680 production and with the Gen 3 platform, based on what was disclosed at Investor Day.
None of this has changed recently. The only major recent change was substantially cutting car prices, which, according to the company, is basically just adjusting for interest increases to keep monthly loan/lease payments approximately equal to where they had been previously. Automotive is a cyclical business that currently is in a recession. So what?