Tesla delivered an unexpected third-quarter profit of $2.17 billion, marking a 17.3% increase from the same period in 2023, thanks to robust electric vehicle (EV) sales.
The boost in net income comes as a welcome surprise after a challenging year that saw declining sales and profits in the first two quarters. CEO Elon Musk expressed optimism for continued growth, predicting a 20% to 30% rise in sales for 2025.
In its quarterly letter to investors, Tesla revealed that vehicle deliveries are set to grow slightly this year, surpassing the 1.8 million delivered worldwide in 2023. The company’s revenue for Q3 reached $25.18 billion, a 7.8% increase from last year, though it fell just short of Wall Street’s expectations of $25.47 billion. However, Tesla’s earnings per share of 72 cents exceeded analyst forecasts of 59 cents, helping to drive a nearly 12% jump in the company’s stock price following the announcement.
Despite price cuts and low-interest financing, Tesla saw strong demand for its aging vehicle lineup, which contributed to the quarterly profit boost. The company also reduced the cost per vehicle to its lowest level, approximately $35,100. Musk noted that the rise in profits came despite a difficult environment for auto sales, including high interest rates that have impacted consumer buying power.
Tesla sold 462,890 vehicles globally from July through September, a 6.4% increase from the previous year. This outpaced analyst expectations, further solidifying Tesla’s position as the leading EV manufacturer, even amid increasing competition from global rivals.
Tesla’s investor letter hinted at new, more affordable vehicles that will be introduced next year, with production expected to begin in the first half of 2025. While details remain sparse, Musk has suggested a potential price tag of under $30,000, factoring in government incentives. In addition, Tesla showcased its upcoming two-seat autonomous “Cybercab” robotaxi, which Musk said could be in production by 2027.
Tesla’s focus on autonomous technology continues to be a major strategic pivot, with Musk predicting that the company’s “Full Self-Driving” system will surpass human driving safety levels by mid-2025. However, the company has faced scrutiny from US regulators investigating the system’s performance in low-visibility conditions, adding a layer of uncertainty to its ambitious goals.
During Q3, Tesla’s gross profit margin rose to 19.8%, the highest it has been in a year, though still lower than its 2022 peak of 29.1%. Tesla also earned $739 million in regulatory credits, its second-highest quarter for such earnings. Analysts have pointed out that Tesla’s growing software business, which offers higher profit margins than vehicle sales, has been a key factor in the company’s financial strength.
The Associated Press, the Wall Street Journal, and the Financial Times.
