Tesla Q3 Results: Profit Rises 17% On Strong Sales; Projects 30% Growth For 2025

Tesla's strong Q3 results mark a turnaround which had experienced declines in both sales and profits during the first half of the year

Following the earnings report, Tesla shares soared nearly 12 per cent in after-hours trading.

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Tesla's net income for the third quarter rose 17.3 per cent year-on-year (YoY), driven by robust electric vehicle (EV) sales, the company announced Wednesday. CEO Elon Musk expressed optimism for continued growth, predicting a 20 per cent to 30 per cent increase in sales for 2025, although he acknowledged that external factors could alter this outlook, as per a report by AP.

The strong Q3 results mark a turnaround for the Austin, Texas-based automaker, which had experienced declines in both sales and profits during the first half of the year. In a letter to investors, Tesla projected slight growth in vehicle deliveries for 2024, surpassing the 1.8 million cars delivered globally last year.

From July to September, Tesla earned $2.17 billion, up from $1.85 billion during the same period in 2023. Despite price cuts and low-interest financing designed to stimulate demand for its aging vehicle line-up, Tesla achieved its first year-over-year profit increase of 2024. Revenue rose 7.8 per cent to $25.18 billion, falling short of Wall Street’s $25.47 billion estimate, but Tesla still exceeded expectations with an adjusted profit of 72 cents per share, outperforming analyst forecasts of 59 cents.

Following the earnings report, Tesla shares soared nearly 12 per cent in after-hours trading.

On a call with analysts, Musk highlighted the challenges posed by high loan interest rates in the auto industry, but highlighted Tesla’s strong position. "No other EV company is profitable, to the best of my knowledge," Musk said.

Tesla’s Q3 vehicle sales numbers, released earlier this month, revealed 462,890 units sold between July and September, a 6.4 per cent increase from the previous year, surpassing analyst expectations.

The automaker also announced plans to start production of new, more affordable vehicles in early 2025. While specific models and prices were not disclosed, Musk hinted at a price point under $30,000, factoring in government tax incentives. Tesla has previously indicated a target of $25,000 for its upcoming models.

In a separate development, Tesla recently showcased a two-seat robotaxi, dubbed the "Cybercab," at an event in Hollywood. Musk stated that production of the vehicle, projected to cost around $25,000, could begin by 2027.

Tesla's cost-saving efforts have reduced the cost of goods per vehicle to its lowest level ever, approximately $35,100. The company’s gross profit margin rose to 19.8 per cent, its highest in a year, though still below the 29.1 per cent peak seen in the first quarter of 2022.

Tesla also reported $739 million in revenue from regulatory credits, its second-highest total on record, driven by sales of credits to other automakers struggling to meet emissions targets.

On the subject of autonomous driving, Musk stated that Tesla's "Full Self-Driving" (FSD) system would surpass human drivers in safety by mid-2025. However, he acknowledged that older versions of the system might not meet the necessary standards, in which case Tesla would upgrade the hardware for free.

This announcement comes shortly after U.S. regulators launched an investigation into the FSD system’s performance under low-visibility conditions, following four crashes involving Teslas. The National Highway Traffic Safety Administration is examining whether the FSD system can effectively detect and respond to hazards like sun glare, fog, and dust.

Analysts like Edward Jones' Jeff Windau noted that Tesla is now profiting from its software offerings, which boast high profit margins. However, Windau maintained a “hold” rating on the stock, citing Tesla's ambitious goals in robotics and autonomous vehicles. "They’ve got a lot of challenging targets," he said.