Tesla shares posted their largest one-day increase since 2013, after the world’s biggest electric vehicle manufacturer reported a higher than expected quarter profit. The company also forecasted “slight growth in deliveries” this year, and a large jump in 2025.
This performance is a significant turnaround for Tesla which had suffered a number of disappointing quarters due to concerns about a slowing demand for electric cars in the global market. Elon Musk’s divisive political activism and the court battle over his $56bn share option package have also caused it to be impacted.
Musk predicted Wednesday afternoon that vehicle sales would increase by 20-30% next year as cost reductions reduce prices of existing vehicles, which will in turn spur demand.
He also mentioned improvements in the self-driving technologies and new products including his autonomous “Cybercab” unveiled earlier this week. Musk said that lower interest rates are reducing monthly payments for financing and this is having a significant impact on demand.
Tesla’s shares increased by 21.9 percent on Thursday, adding over $150 billion to its market capitalization. Investors may be relieved that shares are now half the value they were in November 2021, even though Tesla is still the world’s most valuable carmaker.
According to a filing by the Texas-based firm, adjusted net income for third quarter increased 8 per cent compared to the same period last year to $2.5bn. This exceeded expectations of $2.1bn. The company’s revenue rose by 8 percent to $25.2 billion, just shy of the $25.4 billion average estimate from analysts.
The profit was driven by the 2 percent increase in vehicle sales, which accounts for four fifths of the group’s income. A 52 percent increase in energy generation and storage and a 29 percentage increase in services (including its superchargers) also contributed to this increase.
Operating expenses dropped 6 percent to $2.3bn, after the company cut 14% of its workforce earlier in the year.
Tesla stated that despite the macroeconomic situation, it expects to see a slight increase in vehicle deliveries by 2024. Tesla said that “plans for new cars, including more affordable versions, are on track to start production in the first six months of 2025.”
Musk, however, said that Tesla is not working on the much-anticipated $25,000 affordable “Model 2”.
“We do not make a non robotaxi model. . . “Having a standard [$25,000] is useless, it’s completely irrelevant when you consider what we believe,” said he.
He added, “It is obvious that autonomy is the future.”
Musk stated that Tesla’s focus was on reducing costs of current models. After subtracting government incentives for electric vehicles, the Cybercab’s price would be around $25,000
Musk made a strategic pivot to autonomous driving, robotics and artificial intelligence, predicting that these technologies will soon be Tesla’s main revenue source and increase its valuation. He has recently revealed a prototype of a fleet of self driving “Cybercabs”, which he hopes will be in production by the beginning of 2027.
Analysts and investors were disappointed by the lack of technical or financial details provided in the “We, Robots” event, which was held in a Los Angeles movie studio, where Tesla’s humanoid “Optimus” robots performed to Daft Punk while serving beer to the attendees. Shares fell 9 percent in the wake.
The third-quarter data provided further optimism. Tesla announced that Cybertruck reported a positive margin of gross profit for the first-time — after years production delays and recalls. It was also the third most popular electric vehicle in America behind the Model Y. Musk also said that the company’s “Semi”, electric truck factory, would begin production by next year.
Tesla announced earlier this month that deliveries in the third-quarter rose by 6.4% to 462,890 cars worldwide, boosted by Chinese sales, which offset a weak demand in Europe. It maintained its position as the leading electric vehicle manufacturer ahead of China’s BYD.
Analysts also noted on Wednesday that Tesla’s gross profit margin had improved to 19.8% in the third quarter, up from 17.9% in the same time period last year.
This closely watched financial indicator was boosted by $739mn in revenue from regulatory credits that it sold to other manufacturers who did not meet emission targets for electric vehicles. This was the second highest amount after the record of $890mn for the second quarter.
Tesla has also updated the number of Nvidia graphics processor unit chips that are installed in its Texas manufacturing facility. These chips are used to train AI systems, which underpin Tesla’s self-driving tech called FSD. The company said that 29,000 graphics processing units were installed at the Gigafactory, and the number would rise to 50,000 chips by the end October.
Musk’s support of Donald Trump, the Republican candidate for president, has caused controversy. He will give away one million dollars a day for registered voters who sign a petition supporting free speech and right to bear arms.
Musk has promised to return the favor by making Trump head of a new “department for government efficiency,” which would offer suggestions on how to cut spending, bureaucracy, and regulations. This position could be beneficial to Musk’s other companies, such as SpaceX and social network X. These political activities could provoke the anger of Democratic candidate Kamala Harri if she wins.
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