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Shares of Tesla rose after the world’s largest electric vehicle maker reported better-than-expected quarterly profit while forecasting “slight growth” in deliveries this year and a big improvement in 2025.
The performance marks a turnaround for Tesla, which has endured some disappointment as concerns spread about slowing global demand for electric vehicles. It is embroiled in a divisive political campaign by its chief executive, Elon Musk, and a court battle to reclaim his $56bn stock option package.
Musk predicted on Wednesday afternoon that auto sales would increase by 20 percent to 30 percent next year as cost-cutting measures boosted demand after lowering the prices of existing cars.
He also cited improvements in self-driving technology and new products, including its autonomous “Cybercab” unveiled earlier this month. Musk said low interest rates are driving down monthly financing payments and that’s having a meaningful impact on demand.
Tesla’s shares rose 20 per cent on Thursday, adding more than $100bn to its market value. That may provide some relief to investors, given the shares are about half of their November 2021 peak, although the group remains the most valuable global carmaker.
Adjusted net income in the third quarter rose 8 per cent from a year earlier to $2.5bn, beating expectations of $2.1bn. Filing From a Texas-based company. Revenue rose 8 per cent to $25.2bn, slightly missing analysts’ average estimate of $25.4bn.
A 2 percent increase in revenue from vehicle sales – which contributes four-fifths of group income – included a 52 percent increase in its energy generation and storage business and a 29 percent increase in its services division. Its supercharger network.
Operating costs fell 6 per cent to $2.3bn after cutting a tenth of its workforce, around 14,000 jobs, earlier this year.
“Despite current macroeconomic conditions, we expect to see modest growth in vehicle deliveries in 2024,” Tesla said. “Plans for new vehicles, including more affordable models, are on track to begin production in the first half of 2025.”
However, Musk said Tesla is not building the much-anticipated affordable $25,000 “Model 2.”
“We’re not building a non-robotic model . . . with a routine [$25,000] The model makes no sense and is completely irrelevant given what we believe,” he said.
“It’s blindingly obvious at this point, that [autonomy] The future,” he added.
Instead, Musk said Tesla would focus on lowering the cost of existing models. When government electric vehicle incentives are deducted, its CyberCab costs about $25,000.
Musk has developed a strategic focus on autonomous driving, artificial intelligence and robotics, predicting that these technologies will soon be Tesla’s main sources of revenue and boost its valuation. He recently unveiled a prototype for a new fleet of self-driving “cybercabs” that he hopes will be in production before the 2027 launch.
However, the “We, Robot” event at a movie studio in Los Angeles lacked engineering or financial details, with Tesla’s “Optimus” humanoid robots dancing to Daft Punk and serving beer to attendees — leaving analysts and investors disappointed. Shares subsequently fell 9 percent.
Data for the third quarter gave more hope. Tesla said Cybertruck production posted a positive gross margin for the first time — after years of production delays and recalls — and is the third best-selling electric vehicle in the U.S. behind its Model Y and Model 3. The company added its “semi” electric. The truck factory will begin production by the end of next year, and Musk said there is “ridiculous demand.”
Earlier this month, Tesla reported third-quarter deliveries rose 6.4 percent to 462,890 vehicles worldwide, boosted by Chinese sales that offset weak demand in Europe. It retained its position as the leading electric vehicle maker ahead of China’s BYD.
Tesla’s gross margin expanded to 19.8 percent in the quarter, up from 17.9 percent in the same period last year, analysts said Wednesday.
A closely-watched financial measure includes $739mn in revenue from regulatory credits it sells to other manufacturers that don’t meet emissions targets related to electric vehicle production. This was the second highest after the $890mn record in the second quarter.
Tesla gave an update on the number of Nvidia H100 graphics processing unit chips installed at its Texas manufacturing plant, which trains the AI systems that support its self-driving technology, called FST. It said 29,000 have been installed in one cluster at the Gigafactory, and this will increase to 50,000 by the end of October.
Musk has been embroiled in controversy for his strong endorsement of Republican presidential candidate Donald Trump. He is giving $1 million a day to registered voters in swing states who sign petitions supporting free speech and the right to bear arms.
In return, Trump has promised to make Musk head of the “Department of Government Efficiency,” a position that would benefit his other companies, including SpaceX and Social Media Network X, with recommendations to cut costs, bureaucracy and regulations. The political moves will draw the ire of Democratic candidate Kamala Harris if she wins.
