Tesla earnings surge 9% in Q3

Tesla reported a surprise 9% increase in third-quarter earnings on Wednesday, despite lighter-than-expected revenue.

Q3 2024 Shareholder Update → https://t.co/sXBSeLibSL

— Highlights

– Produced our 7 millionth vehicle at Fremont factory!

– Preparations for new vehicles remain underway (including more affordable models), which we'll begin launching in the first half of 2025

– Record gross… pic.twitter.com/is1UhqdH7r

— Tesla (@Tesla) October 23, 2024

The electric vehicle giant’s stock surged after the close, as CEO Elon Musk expressed optimism about full self-driving (FSD) technology, vehicle deliveries, and energy storage during the earnings call. Musk indicated that while Hardware 4 outperforms Hardware 3, there might be a chance that Hardware 3 won’t achieve the safety level necessary for unsupervised FSD. If this is the case, upgrades will be provided to those who purchased Hardware 3.

Wild to think that Tesla’s mass flux is ~4 million tons of complex manufactured goods

— Elon Musk (@elonmusk) October 23, 2024

The Tesla Roadster design is close to being finalized, with hints about a potentially flying car, though no concrete details were provided. Tesla recognized $326 million of FSD revenue in Q3, contributing to its strong earnings and margins.

Tesla delivered an early Christmas present for investors as the bulls got a monster margin rebound and a surprisingly strong delivery outlook for 2025 which we would characterize as an Aaron Judge-like quarter and guidance. Margins spike and 20%-30% delivery growth in 25 🏆🔥🐂🍿

— Dan Ives (@DivesTech) October 24, 2024

Musk projected that with incentives, Tesla’s upcoming affordable vehicle would be priced below $30,000, aligning closely with the price range of current models. Tesla’s energy storage business is expanding rapidly, nearing the milestone of shipping 100 gigawatt hours annually, and the Megapack factory in Shanghai is close to completion. Tesla plans to roll out a ride-hailing service in California and Texas by next year, depending on regulatory approvals. The internal goal for FSD is to make it safer than human driving by Q2 2025.

Tesla’s unexpected Q3 earnings boost

Musk noted an improved uptake for FSD, though specifics were not provided. Musk projected a vehicle sales growth of 20%-30% for 2025, aiming for the CyberCab to reach volume production by 2026 with at least 2 million units annually. This vehicle, introduced at the recent robotaxi event, lacks steering wheels or pedals and will require full autonomy. Tesla reported Q3 earnings of 72 cents per share, up 9% year-over-year, while revenue grew by 8% to $25.18 billion. Gross margins improved to 19.8%, and Tesla Energy gross margins hit a record 30.5%. Plans for new, more affordable vehicles are on track for production in the first half of 2025. The refreshed Model 3 production increased with lower costs in Q3, and the Cybertruck production achieved a positive gross margin for the first time. Tesla remains optimistic about increasing vehicle deliveries in 2024, despite weaker sales in the U.S. and Europe, bolstered by strong performance in China. The expectation of vehicle delivery growth and the doubling of energy storage deployments in 2024 provide a buoyant outlook for Tesla’s future. Analysts, including Garrett Nelson from CFRA and Dan Ives from Wedbush Securities, viewed the Q3 report positively, highlighting the affordable vehicle models remaining on track for production by 2025 and improvements in automotive ex-credits gross margins. As Tesla navigates economic challenges, its technological advancements and strategic initiatives are likely to shape the future of the automotive and energy sectors.