Tesla (TSLA) released its third-quarter earnings on Wednesday, revealing mixed results. However, the stock surged in after-hours trading as investors expressed optimism over the earnings surpassing expectations, improved gross margins, and updates on the production timeline for Tesla’s more affordable electric vehicle (EV), set to launch next year. CEO Elon Musk indicated that the company could see a growth rate of 20-30% in volume for the upcoming year during the earnings call.
The automaker reported revenue of $25.18 billion for the quarter, slightly below the $25.4 billion projected by Bloomberg but higher than the $25.05 billion reported in the previous quarter and the $23.40 billion from the same period last year. Tesla’s adjusted earnings per share (EPS) came in at $0.72, exceeding the expected $0.60, with an adjusted net income of $2.5 billion and free cash flow of $2.9 billion.
Gross margins, a key performance indicator for the company, reached 19.8%, surpassing expectations of 16.8%. Following the earnings announcement, Tesla shares increased by nearly 11% in after-hours trading.
In their earnings statement, Tesla highlighted, “We delivered strong results in Q3 with growth in vehicle deliveries both sequentially and year-on-year, resulting in record third-quarter volumes. Preparations remain underway for our offering of new vehicles — including more affordable models — which we will begin launching in the first half of 2025.”
Earlier this month, Tesla had reported third-quarter deliveries that slightly fell short of market expectations, leading to a decline in the stock price. The company announced that it delivered 462,890 vehicles in Q3, a 6.4% increase from the previous quarter and exceeding the 435,059 vehicles delivered in the same quarter last year. However, this figure was slightly below Wall Street’s expectation of 463,897 deliveries.
Tesla noted that the refreshed Model 3 production saw success in Q3, resulting in higher total production and decreased costs compared to the previous quarter. Additionally, Cybertruck production increased and achieved a positive gross margin for the first time.
Looking ahead, Tesla anticipates “slight growth” in vehicle deliveries for 2024. Elon Musk conveyed during the conference call that the company could aim for a growth rate of 20-30%, but he referred to it as a “best guess.”
Prior to the Q3 earnings release, Tesla shares had experienced a decline of around 11% since the unveiling of its robotaxi, the Cybercab, at the “We, Robot” event held on October 10 in Burbank, California. Investors and analysts expressed a desire for more information regarding the Cybercab and its testing plans, alongside inquiries about the development of Tesla’s upcoming sub-$30,000 EV referred to as Model 2.