Headline: Tesla Anticipates Modest Delivery Growth in 2024, Profits Surpass Expectations
Electric vehicle manufacturer Tesla has reported a slight increase in vehicle deliveries for 2024. This announcement coincided with the company's third-quarter results, revealing that profit margins exceeded expectations due to a drop in raw material costs. This development led to a 7% rise in Tesla shares during after-hours trading.
On Wednesday, the company expressed its commitment to expanding its product range, reducing costs, and investing in artificial intelligence (AI) projects and production capacity, despite economic challenges and a trend among others to scale back investments in electric vehicles (EVs). Tesla's statement highlighted its resilience amid ongoing macroeconomic challenges.
In the third quarter, Tesla reported record vehicle deliveries and the second-highest regulatory credit revenues. The profit margin on vehicle sales, excluding these credits, rose to 17.05% from 14.6% in the previous quarter, significantly above the 14.9% margin anticipated by analysts surveyed by Visible Alpha.
Tesla also emphasized a substantial reduction in the cost of goods sold per vehicle, reaching an all-time low of approximately $35,100. The reduction in prices for raw materials used in EV batteries was noted as a contributing factor to decreased costs, though it was mentioned that the impact of these savings is expected to diminish over time.
Despite a 2% decline in normal trading on Wednesday, the after-hours share increase added approximately $50 billion to Tesla's market value. Tesla had previously reported in October that deliveries in the September quarter rose by more than 6% compared to the previous year, indicating a recovery after a decline in the first half of the year.
Last year, Tesla implemented strategic price cuts leading to a sharp decline in profit margins. However, this year the company shifted towards offering more favorable financing options and discounts, a move analysts believe could help stabilize margins in the future.
Additionally, Tesla has recently introduced new products such as the Cybercab robotaxi and a 20-person autonomous minibus as part of its efforts to advance self-driving technology. These efforts also include the Optimus humanoid robot.
Tesla's third-quarter revenue was $25.18 billion, slightly below the $25.37 billion forecast by LSEG but up from $23.35 billion in the same period in 2023. Adjusted earnings per share for the quarter were 72 cents, surpassing the consensus estimate of 58 cents. The company's overall profit margin for the July-September quarter reached 19.8%, exceeding LSEG analysts' estimate of 17.3% and surpassing the 18% rate from the second quarter.