Tesla (TSLA) delivered unexpected third-quarter earnings on Wednesday, showcasing a 9% increase in quarterly profit, amid a slew of announcements from the electric vehicle manufacturer. Although revenue fell short of expectations, Tesla’s stock climbed significantly after hours.
During the earnings call, CEO Elon Musk maintained an optimistic tone, expressing confidence in advancements related to full self-driving technology, vehicle deliveries, and energy storage initiatives.
The call wrapped up at 6:37 p.m. ET, with Musk sharing upbeat updates on various aspects of the company following the report of robust earnings and margins. Tesla’s stock soared 12% in the extended trading session as Musk continued to speak.
Musk warned that there is “some chance” Hardware 3 may not reach the safety standards necessary for completely autonomous driving, but assured that Tesla would provide free upgrades to customers who purchased the older hardware if required. He noted that Hardware 4 significantly surpasses Hardware 3 in terms of capabilities.
Regarding the Tesla Roadster, Musk mentioned they are nearing the final design and humorously hinted at the possibility of it being able to fly.
In the third quarter, Tesla reported $326 million in full self-driving (FSD) revenue, which contributed to their strong earnings and margins as the company recognizes this revenue upon meeting specific targets.
Musk also teased an upcoming affordable electric vehicle, suggesting it would be priced below $30,000 with applicable incentives, although this could only represent a modest reduction from the current Model 3 and Y prices.
The energy sector appears to be thriving, with Musk projecting that Tesla could soon ship 100 gigawatt hours of stationary storage annually, as their Megapack factory in Shanghai approaches completion.
Musk reiterated plans to launch a ride-hailing service based on FSD technology in California and Texas in 2024, contingent on regulatory approvals. He also projected that by Q2 2025, the full self-driving system should surpass human driving safety.
Internal estimates suggest a potential vehicle sales growth of 20% to 30% in 2025, with the CyberCab, unveiled at the recent robotaxi event, expected to achieve high production rates by 2026.
Musk emphasized the impressive growth of the energy storage business, describing demand as “growing like wildfire.”
The earnings call commenced with Musk expressing optimism regarding production and cost efficiencies, particularly highlighting a significant reduction in the cost of goods sold per vehicle.
Tesla’s latest earnings report indicated a 9% earnings growth to 72 cents per share, with revenue reaching $25.18 billion, which was an 8% increase from the same quarter last year. Despite analysts predicting higher revenue, Tesla did report improved gross margins.
Tesla continues to focus on delivering new vehicle models, including more affordable options expected to enter production in the first half of 2025. The company also noted an increase in Cybertruck production, which achieved a positive gross margin for the first time.
As Tesla enters the fourth quarter, they anticipate needing a larger boost in vehicle deliveries to meet annual targets while facing increased incentive offers in recent days.
Despite a challenging October, Tesla’s stock climbed over 7% in after-hours trading following the earnings announcement, recovering slightly from previous losses. Nonetheless, analysts remain cautious, emphasizing the importance of upcoming supply and demand conditions affecting Tesla’s future performance.