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Tesla made a profit of $1.6 billion in the third quarter of 2021. While the company produced 237,823 cars, it delivered 241,391 units. The third quarter ended with $1.3 billion in free cash flow and $16 billion in cash and cash equivalents. Impressively, these record results have been achieved despite supply chain problems such as congested ports and semiconductor pancreas.

In its presentation to investors, the company said that record production and internal cost reductions more than offset a small drop in the average selling price of its vehicles. That’s why it currently has an operating margin of 14.6%.

Model 3 and Model Y had significant success in the process. Tesla produced 228,882 of these battery electric vehicles and delivered 232,102. Model S and X numbers have increased a lot compared to the second quarter of 2021. The company produced 8,941 and delivered 9,289, but by this time last year the company was selling almost twice as much.

Tesla’s solar and storage businesses are also making rapid progress in the third quarter, using almost more solar power (83 MW) and slightly more battery storage (1,295 MWh) in the third quarter compared to the second quarter of this year.

On the other hand, perhaps the most interesting detail in the investor presentation was the news that Tesla changed the battery chemistry for all standard series Model 3 and Model Y. Until now, most Teslas have used batteries with nickel cobalt aluminum (NCA) chemistry. More recently, the company has begun offering an alternative, an older technology, that uses a lithium iron phosphate (LFP) chemistry.

LFP cells are cheaper than NCA or NMC cells and have much longer useful lives with a lower energy density swap. However, the less volatile nature of LFPs means you don’t have to worry about thermal runaway in the event of a collision. This means that an LFP battery pack has to spend much less volume on cooling and structural protection to keep cells separate.

So far, intellectual property restraints have mostly kept LFP cells in China, but export restraints will be eased next year, and Tesla has received approval from the Chinese government to start using LFP batteries in Chinese-made BEVs in 2020. Last month, the company began asking US customers if they would accept standard-range cars with LFP. LFP packedollarser instead of NCA now makes this transition mandatory for all regions.

Tesla does not detail which company will supply him with LFP cells. On the other hand, Tesla has existing contracts with CADollars, a major source of LFP cells in China.

Meanwhile, Tesla announced that new cars will be released in 2022 and 2023.


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Michael Lewis

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