Tesla (TSLA) Q3 2024 earnings report

Tesla It reported third-quarter earnings on Wednesday that beat analyst estimates even as revenue fell short of expectations. The stock rose 12% in extended trading.

Here's what the company reported compared to what Wall Street was expecting, based on a survey of analysts conducted by LSEG:

Earnings per share: 72 cents, adjusted vs. 58 cents expected. Revenue: $25.18 billion vs. $25.37 billion expected

Revenue increased 8% in the quarter from $23.35 billion a year earlier. 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.

Profit margins were boosted by $739 million of auto regulatory credit revenue during the quarter. Automakers are required to obtain a certain amount of regulatory approvals each year. If they can't meet the goal, they can buy credits from companies like Tesla, which has excess credits because they only make electric cars.

Automotive revenues increased 2% to $20 billion from $19.63 billion in the same period a year earlier and are roughly flat since late 2022. Energy generation and storage revenues rose 52% to $2.38 billion, while services and other revenues rose, which Includes revenues from the non-public sector. Warranty repairs for Tesla vehicles jumped 29% to $2.79 billion.

CEO Elon Musk said on the earnings call that his “best guess” is that “vehicle growth” will reach 20% to 30% next year, due to “low-cost vehicles” and “the emergence of autonomy.” Analysts surveyed by FactSet had expected an overall increase in deliveries next year of about 15% to 2.04 million.

Asked on the call whether Tesla would make a low-cost electric car that isn't a Cybercab, Musk said all of the company's cars moving forward will be self-driving. Of the 7 million vehicles Tesla has produced so far, the “vast majority” are “capable of self-driving,” he said, adding that the company is “currently on order for 35,000 self-driving vehicles per week.” Tesla still doesn't produce or sell cars that are safe to use without a human at the wheel, ready to steer or brake at all times.

Musk said the company will eventually produce two million e-taxis annually, and will offer driverless passenger transportation in its vehicles as early as 2025 in Texas and possibly California. Tesla developed a ride-hailing app that some employees in California were able to use this year, he said.

“You can request a ride and it will take you anywhere in the Bay Area,” Musk said. “We have a safety driver right now.”

Tesla is not currently licensed to operate a commercial business, transportation network, or passenger transportation service in California, according to a list of permits issued on the California Public Utilities Commission website.

In a shareholder group, Tesla said the Cybertruck has become the third best-selling electric vehicle in the United States, behind only the Model 3 and Model Y. Tesla does not generate sales by model.

While Tesla's steel truck has 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 statement that the Cybertruck “achieved a positive gross margin for the first time.”

FSD, the company's fully supervised self-driving system, contributed $326 million in revenue this quarter after Tesla made it available for use in the Cybertruck and added a feature called “Actually Smart Summon,” Tesla CFO Vaibhav Taneja said on the call. FSD is a premium driver-assistance system sold to Tesla customers as an upfront option or for a monthly fee.

Earlier this month, Tesla announced deliveries of 462,890 vehicles in the third quarter. Deliveries are the closest approximation of sales reported by Tesla. The company also said it produced 469,796 electric vehicles in the period ending September 30.

While deliveries increased 6% compared to the previous year, they fell short of analysts' expectations and came after two consecutive quarters of year-over-year declines. Tesla offers a range of discounts and incentives to stimulate sales.

“Despite persistent macroeconomic conditions, we expect slight growth in vehicle deliveries in 2024,” the company said in its earnings report on Wednesday. The company also confirmed its goal to “launch” more affordable models in the first half of 2025.

Tesla faces increasing competitive pressure, especially in China, from companies such as BYD and Geely, along with a new generation of automakers, including Li Auto and Nio. In the United States, older automakers Ford and GM They have begun selling more electric cars, despite backing away from their previous electrification commitments.

The earnings report comes less than two weeks after a long-awaited robotics event that left shareholders wanting more details, and arrives about two weeks before the presidential election, which has occupied a large part of Musk's agenda recently as he campaigned for former President Donald Trump. Trump.

According to questions submitted by investors via Say Technologies' online platform, a large number of shareholders wanted to know how Musk's pro-Trump activity would affect Tesla and its stock price. No questions related to Trump were asked on the call.

Before Wednesday's after-hours surge, the stock had fallen 18% in October and was headed for its worst month since January. Over the course of the year, stocks fell 14%, while the Nasdaq rose 22% during that stretch.

Musk spent tens of millions of dollars to return Trump to the White House, even though the former president does not support the kinds of federal spending on electric vehicles, charging infrastructure and environmental regulations that Tesla has benefited from for years.

Musk also said at a recent event in Harrisburg, Pennsylvania, that he finds many government agencies and regulations in the United States to be ineffective and unnecessary.

Watch: Tesla's margins are expected to decline slightly