By james art FREMONT, Calif. — Tesla’s third-quarter net income rose 17.3 percent from a year earlier on stronger sales of electric vehicles, and bullish CEO Elon Musk forecast sales growth of 20 percent to 30 % in the following year.
The strong showing changed the trajectory of the year for the Austin, Texas-based company, which saw sales and profits decline in the first two quarters.
In its letter to investors, Tesla forecast a slight increase in vehicle deliveries this year, better than the 1.8 million delivered worldwide in 2023.
Tesla said on Wednesday it made $2.17 billion from July to September, up from the $1.85 billion profit it reported in the same period in 2023.
The gains came despite price cuts and low-interest financing that helped boost sales of the company’s aging lineup in the quarter. It was Tesla’s first quarterly profit increase over the previous year for 2024, a year plagued by declining sales and prices.
Find out what’s happening in Fremontwith free real-time updates from Patch.
Revenue in the quarter rose 7.8% to $25.18 billion, missing Wall Street analysts’ estimate of $25.47 billion, according to FactSet. Tesla made an adjusted 72 cents a share, well beating analysts’ expectations of 59 cents.
Shares of Tesla Inc. jumped nearly 12% in after-hours trading Wednesday.
On a conference call with analysts, Musk said the profit increase came despite a challenging environment for auto sales with still high interest rates. “I think if you look at the EV companies in the world, as far as I know, no EV company is even profitable,” he said.
Musk qualified his forecast that Tesla will report 20% to 30% growth in car sales in 2025, saying that could be changed by “negative external events.”
Earlier this month, Tesla said it sold 462,890 vehicles from July to September, up 6.4 percent from a year ago. The sales numbers were better than analysts’ expectations.
The letter said Tesla is on track to begin production of new vehicles, including more affordable models, in the first half of next year, something investors have been looking for. The new vehicles will use parts from current models and be produced on the same assembly lines as Tesla’s current model range, the letter said.
The new vehicles were not identified and the price was vague. Musk has said in the past that the company is working on a car that will cost about $25,000, but said Wednesday that a new affordable vehicle will cost less than $30,000, including state tax incentives.
Earlier this month, the company showed off a custom-built two-seater robotics called “Cybercab” at a glitzy event at a Hollywood movie studio. Musk said it would be in production before 2027 and cost about $25,000.
Using parts from existing models and the current production system, Tesla will not achieve the cost reductions it previously expected using a new production setup.
Tesla said it has reduced the cost of goods per vehicle to its lowest level ever, around $35,100.
The company’s widely watched gross profit margin, the percentage of revenue it must keep after expenses, rose to 19.8%, the highest level in a year, but still less than the peak of 29.1% in first quarter of 2022
In the quarter, Tesla’s revenue from regulatory credits bought by other automakers that can’t meet government emissions targets hit $739 million, the second-highest quarter in the company’s history.
Musk said Tesla’s “fully self-driving” system is improving and will be driving more safely than humans in the second quarter of next year. Despite the name, Teslas using “Full Self-Driving” cannot drive themselves and human drivers must be ready to step in at any time.
The company, he said, offers an autonomous ride service to employees in the San Francisco Bay Area, but currently has drivers for human safety. It expects to launch a robo-taxi service for the public in California and Texas next year, he said.
Musk also acknowledged that it may not be possible to reach autonomous driving safety levels with older editions of the “Full Self-Driving” hardware. If it can’t do that, Tesla will upgrade the computers in the older cars for free, he said.
The self-driving claims come just five days after US safety regulators launched an investigation into the system’s cameras to see in low-visibility conditions such as sun glare, fog and dust in the air. The study raised doubts about whether the system will be ready to move on its own within the next year.
The National Highway Traffic Safety Administration said in documents released Friday that it opened the probe into 2.4 million Teslas after the company reported four crashes in low visibility conditions. In one, a woman who stopped to help after a crash on a highway in Arizona was struck and killed by a Tesla.
Investigators will examine the ability of “Full Self-Driving” to “detect and respond appropriately to reduced visibility conditions on the road.”
Edward Jones analyst Jeff Windau said the earnings report and conference call showed Tesla is making money from software, a business with high profit margins.
Still, he has a “hold” rating on the stock as the company moves into robotics and autonomous vehicles. “They have very challenging goals there,” he said.