Tesla CEO and X-owner Elon Musk speaks during a Tesla product unveiling event on October 10, 2024 in Los Angeles, California, USA
Source: Tesla | Youtube
Tesla reported third-quarter profit on Wednesday that beat analysts' estimates, although revenue fell just short of expectations. The stock rose 10.7% in premarket trading.
Here's what the company reported compared to Wall Street's expectations, based on an LSEG analyst survey:
- Earnings per share: 72 cents, adjusted versus 58 cents expected
- Revenue: $25.18 billion versus expected $25.37 billion
Revenue rose 8% in the quarter from $23.35 billion a year ago. Net income rose to about $2.17 billion, or 62 cents per share, from $1.85 billion, or 53 cents per share, a year ago.
Margins were strengthened during the quarter by $739 million in auto adjustment loan revenue. Automakers must receive a certain amount of regulatory credits each year. If they can't meet the target, they can buy loans from companies like Tesla, which has excess credit because it only makes electric vehicles.
Automotive sales rose 2% to $20 billion from $19.63 billion in the same period last year and are almost flat since the end of 2022. Energy generation and storage revenue rose 52% to $2.38 billion, while services and other revenue, which includes revenue from non-warranty repairs of Tesla vehicles, rose 29% to $2.79 billion US dollars.
CEO Elon Musk said on the earnings call that his “best guess” is that “vehicle growth” will reach 20% to 30% next year, driven by “lower-cost vehicles” and the “emergence of autonomy.” Analysts polled by FactSet expected overall deliveries next year to rise about 15% to 2.04 million.
When asked if Tesla would make a lower-cost electric vehicle that isn't a cybercab, Musk said all of the company's future cars would be autonomous. He said that of the 7 million vehicles Tesla has produced so far, the “vast majority” “can drive autonomously,” adding that the company is “currently producing about 35,000 autonomous vehicles per week.” Tesla still does not produce or sell cars that are safe to operate without a human behind the wheel and are ready to steer or brake at any time.
Musk said the company will eventually produce two million cybercabs a year and will offer driverless ride-hailing in its cars as early as 2025 in Texas and likely California. He said Tesla developed a ride-hailing app that some employees in California were able to use this year.
“You can request a ride to take you anywhere in the Bay Area,” Musk said. “We have a safety driver for now.”
According to a list of permits issued on the California Public Utilities Commission website, Tesla does not currently have a license to operate a commercial business, transportation network business or ride-hailing service in California.
Cybertruck Growth
In a shareholder presentation, Tesla said the Cybertruck had become the third-best-selling all-electric vehicle in the U.S., behind only the Model 3 and Model Y. Tesla does not break out sales by model.
While Tesla's boxy steel pickup truck struggled with quality issues, the company still sold more than 16,000 Cybertrucks in the U.S. in the third quarter, according to Kelley Blue Book estimates. Tesla said in the press release that the Cybertruck “achieved positive gross margin for the first time.”
Tesla CFO Vaibhav Taneja said on the conference call that FSD, the company's fully self-driving monitored system, contributed $326 million to revenue in the quarter after Tesla made it available for use in the Cybertruck and added a feature called “Actually Smart Summon” had added. FSD is a premium driver assistance system sold to Tesla customers as an upfront option or for a monthly fee.
Earlier this month, Tesla reported third-quarter vehicle deliveries of 462,890 vehicles. Deliveries are the closest to Tesla's reported sales. The company also said it produced 469,796 electric vehicles in the period ended September 30.
Although shipments increased 6% year-over-year, they fell short of analysts' expectations and posted two straight quarters of year-over-year declines. Tesla offers a range of discounts and incentives to boost sales.
“Despite ongoing macroeconomic conditions, we expect vehicle deliveries to grow slightly in 2024,” the company said in its earnings presentation on Wednesday. The company also reiterated its goal to “launch” cheaper models in the first half of 2025.
Tesla faces increasing competitive pressure, particularly in China, from companies like BYD and Geely as well as a new generation of automakers including Li Auto and Nio. Old car manufacturers in the USA ford And General Motors are beginning to sell more electric vehicles despite rolling back previous electrification commitments.
The earnings report comes less than two weeks after a highly anticipated robotaxi event that has left shareholders wanting more details, and lands about two weeks before the presidential election, which has taken up much of Musk's schedule lately. as he ran for former President Donald Trump.
According to questions from investors on the online platform Say Technologies, a significant number of shareholders wanted to know how Musk's pro-Trump activism will affect Tesla and its stock price. No Trump-related questions were asked on the call.
Before Wednesday's after-hours rally, the stock had fallen 18% in October and was heading for its worst month since January. For the year, shares fell 14%, while the Nasdaq gained 22% in that period.
Musk has spent tens of millions of dollars trying to get Trump back into the White House, even though the former president doesn't support the kinds of federal spending on electric vehicles, charging infrastructure and environmental regulations that have benefited Tesla for years.
Musk also said at a recent event in Harrisburg, Pennsylvania that he believes many government agencies and regulations in the United States are ineffective and unnecessary.
REGARD: Tesla margins are expected to decline slightly
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