Tesla Inc (NASDAQ:TSLA). shares surged 12% in post-market trading on Wednesday after the company said it earned $US2.2 billion ($3.3 billion) from July through September, compared with $US1.9 billion in the same period last year.
The surge added about $80 billion in stock market value, despite the stock dropping 2% during Wednesday's trading session.
Chief executive Elon Musk also said he expected vehicle sales to grow 20% to 30% next year as autonomous technology improvements bore fruit and the company launched more affordable models.
"Slight growth" in auto deliveries this year was also mooted, with deliveries surpassing the 1.8 million vehicles it delivered in 2023.
Overall, Tesla exceeded third-quarter profit expectations, though revenue fell slightly short.
The company remains committed to expanding its vehicle lineup, reducing costs and investing heavily in AI projects and production capacity despite uncertain demand and competitors scaling back EV investments.
"Preparations remain underway for our offering of new vehicles – including more affordable models – which we will begin launching in the first half of 2025," the company said.
Musk has been focused on evolving Tesla from a pure EV manufacturer into a leader in autonomous driving and artificial intelligence. However, the company's robotaxi event earlier this month left investors wanting more specifics on how it plans to achieve this transformation. The following day, Tesla's stock took a hit, with investors reacting to the lack of a clear business plan.
On Wednesday this week, Musk announced that adoption of Tesla's supervised autopilot software, Full Self-Driving (FSD), which led to a significant uptick after the robotaxi event. This month, Tesla once again offered FSD free for a month to existing customers, marking the second time this year.
Investing.com senior analyst Thomas Monteiro said of Tesla’s performance, "The improving numbers across the board signal the company may have finally found a nice sweet spot for the pricing-versus-production-costs equation, which has been the main issue for stock performance since last year. The report also diminishes the urgency for a cheaper model."
The numbers are stacking up
Tesla reported that its cost of goods sold per vehicle, which includes labour and materials, dropped to a record low of approximately $35,100.
Adjusted third-quarter earnings came in at 72 cents per share, surpassing the average estimate of 58 cents. Falling raw material prices for EV batteries have helped Tesla reduce costs this year, though the impact is expected to diminish over time.
According to Reuters calculations, Tesla's third-quarter profit margin from vehicle sales, excluding regulatory credits, increased to 17.05%, up from 14.6% in the previous quarter. Analysts surveyed by Visible Alpha had anticipated a margin of 14.9%.
Tesla has already delivered 1.29 million vehicles in the first nine months of this year and must deliver an additional 514,925 vehicles to surpass last year's record. The company recently announced that third-quarter deliveries rose over 6% year-over-year, marking its first quarterly growth following a decline in the first half of the year.
On Wednesday, Tesla reported its second-highest quarter of regulatory credit revenue, totalling $739 million, up 33% from the same period last year but down from $890 million in the second quarter.
After slashing prices last year, which significantly reduced profit margins, Tesla shifted to offering lower financing options and discounts this spring, a strategy that analysts believe could help stabilize margins in the coming quarters.
Revenue for the July-September quarter came in at $25.18 billion, slightly below the estimated $25.37 billion, according to data from LSEG. In the same quarter of 2023, the company reported sales of $23.35 billion.