By Hyunjoo Jin

SAN FRANCISCO – Tesla (NASDAQ) will release its quarterly results on Wednesday. Investors will pay close attention to the company’s performance in China. Tesla has seen strong sales despite being subject to negative media coverage.

Elon Musk, billionaire entrepreneur and CEO of the company is predicted to post a rise in revenue due to record global deliveries over the July-September period.

It has managed the chip crisis much better than other companies, but some investors fear that supply chain issues may increase costs and reduce margins.

Tesla’s Shanghai facility could have the potential to be a major advantage. This factory has produced more than the Fremont factory (California) and reduced costs through the increased use of Chinese parts such as batteries.

Tesla Inc launched deliveries late August with a cheaper version of its Model Y sports utility vehicle, equipped with iron-based batteries from CATL, China. This source said that Tesla Inc was familiar with this matter.

Dan Ives of Wedbush is bullish about Tesla and said that the Giga China efficiency was front-and center.

Tesla CEO Musk stated that the Shanghai factory produces more cars than its U.S.-based factory.

At a shareholder meeting, he stated, “It is the best quality and lowest cost. It’s also very low drama.”

Despite this, Tesla wasn’t immune to the global supply chain crisis. Tesla is doing better because it was willing to pay.

Musk explained that the “simply inexplicable amount of money” Musk spends on parts for flying around the globe is not sufficient, but it will be temporary.

Many investors are interested in seeing how the costs increase.

“I believe that margins are being affected by this headwind.” They are paying more for parts,” Gene Munster of Loup Ventures (a major investor in Tesla) said.

I believe that it would be hugely positive for them to increase the auto gross margin within this environment.

Tesla may have raised its prices in the USA to ease cost pressures, but it has cut its prices in China. There it is now facing more competition from Chinese counterparts like Nio, Li Auto Inc and Xpeng.

Tesla had received strong backing from the Chinese government when it built China’s first wholly foreign-owned car plant in 2019. However, it is now under scrutiny from regulators over its handling of data and consumer complaints about product safety.

Tesla sales in China increased 44% over the quarter before, thanks to its exports to Europe and introductions of Model Y SUVs that are cheaper.

It seems that the bad news didn’t really affect loyal demand. According to Yale Zhang (managing director of Shanghai-based Automotive Foresight), consumers have high levels of confidence in Tesla’s products.

He said that while other local rivals are catching up quickly, Tesla remains the leader in this area.

The planned expansion of Tesla’s self-driving beta program will be another area that investors should keep an eye. Tesla began expanding access to its software this month after having successfully tested it with approximately 2,000 users for one year.

Tesla’s stock closed at $870.11 on Monday, up 3.2% from its January 26 record of $883.09

Musk, unlike many of his colleagues at the top tech company’s, stated during a July call that it was unlikely that he would attend earnings calls with analysts and investors.

Musk used the calls to engage in colorful, quarterly rituals for his discourses about Tesla technology or to fire at critics and analysts.