Tesla Reports $2.17 Billion Profit for Third Quarter, a 17.3% Increase

Tesla has announced a surprising net income of $2.17 billion for the third quarter, reflecting a 17.3% increase from the same period last year. This growth is attributed to stronger sales of electric vehicles, with CEO Elon Musk anticipating a sales growth of 20% to 30% next year.

This strong performance represents a shift for the Austin, Texas-based company, which experienced declining sales and profits in the first two quarters of the year.

In a letter addressed to investors, Tesla indicated expectations for slight growth in vehicle deliveries for the remainder of the year, surpassing the 1.8 million vehicles delivered globally in 2023.

During the period from July to September, Tesla's profit exceeded the $1.85 billion recorded during the same timeframe last year. The company achieved this revenue boost despite implementing price cuts and offering low-interest financing to help stimulate sales of its older vehicle models.

The third quarter marked Tesla's first year-over-year quarterly profit increase of 2024, a year that has been challenging due to decreasing sales and prices. The company's revenue grew by 7.8%, reaching $25.18 billion, although it fell slightly short of Wall Street's expectations, which were set at $25.47 billion.

Tesla reported an adjusted earnings per share of 72 cents, significantly surpassing the analysts' predictions of 59 cents. Following this announcement, Tesla's shares rose nearly 12% in after-hours trading.

During a conference call with analysts, Musk noted that the company managed to post profits amid a challenging auto sales environment, characterized by elevated loan interest rates. He remarked, "If you look at EV companies worldwide, to the best of my knowledge, no EV company is even profitable."

Musk underlined that his projection of 20% to 30% growth in vehicle sales for 2025 could be affected by unforeseen negative events.

In the third quarter, Tesla sold 462,890 vehicles, marking a 6.4% increase from a year earlier, surpassing analysts' expectations.

The investor letter revealed that Tesla is on track to begin production of new vehicles, including more affordable models, in the first half of next year. These new vehicles will incorporate parts from existing models and will be manufactured on the same assembly lines.

While specifics about these vehicles were not disclosed, Musk previously mentioned the development of a vehicle aimed at costing around $25,000. He indicated that a new affordable model would possibly be priced under $30,000 after factoring in government tax incentives.

Tesla also showcased a purpose-built two-seat robotaxi called “Cybercab” at a recent event in Hollywood, with plans to start production before 2027 at a projected cost of around $25,000.

By utilizing components from existing models and the current manufacturing system, Tesla does not expect to achieve the substantial cost reductions initially anticipated from a new manufacturing process. Nevertheless, the company revealed it has minimized the cost of goods per vehicle to a record low of approximately $35,100.

The firm's gross profit margin, which indicates how much revenue is retained after expenses, reached 19.8%, its highest level in a year, although still below the 29.1% peak observed in the first quarter of 2022.

Additionally, Tesla's revenue from selling regulatory credits to other automakers that fail to comply with government emission targets reached $739 million this quarter, marking the second-highest total in the company's history.

Musk also shared updates about Tesla’s “Full Self-Driving” system, claiming improvements that will allow it to drive more safely than humans by the second quarter of next year. However, despite its name, vehicles utilizing “Full Self-Driving” still require that human drivers remain ready to take control at any time.

He mentioned that Tesla is currently carrying out autonomous ride-hailing trials for employees in the San Francisco Bay Area, though with safety drivers. The company anticipates launching a robotaxi service for public use in California and Texas next year.

Furthermore, Musk acknowledged the challenges of reaching high safety standards for autonomous driving using older “Full Self-Driving” hardware. If necessary, Tesla will upgrade the onboard computers of older models free of charge.

These self-driving developments come shortly after U.S. safety regulators initiated an investigation into the system's cameras responding to low visibility conditions, raising questions about the system's readiness for autonomous driving in the coming year. The National Highway Traffic Safety Administration has opened a probe into 2.4 million Teslas following reports of crashes in low-visibility situations.

Despite the positive earnings performance, Edward Jones analyst Jeff Windau commented that while the report suggests Tesla is generating profits from software, he maintains a “hold” rating on the stock due to the ambitious goals the company is pursuing in robotics and autonomous vehicles. He stated, "They’ve got a lot of challenging goals out there."Tesla, Profit, Sales