On the heels of its highly anticipated but ultimately disappointing robotaxi event, Tesla published its third quarter earnings report, in which it reiterated its plan to launch a “more affordable” electric vehicle in the first half of 2025.
“In order to continue accelerating the world’s transition to sustainable energy, we need to make EVs affordable for everyone, including making total cost of ownership per mile competitive with all forms of transportation,” the company said. “Preparations remain underway for our offering of new vehicles – including more affordable models – which we will begin launching in the first half of 2025.”
“Preparations remain underway for our offering of new vehicles”
Earlier this year, Tesla abandoned its plan to build a more affordable “Model 2” vehicle that was rumored to cost around $25,000. But after a backlash from investors, Tesla CEO Elon Musk recommitted to it — although its still unclear whether it will be an entirely new vehicle, or simply a more affordable Model 3. Musk did say the two-seat Cybercab would be available to buy for $30,000 starting in 2026.
The company said it earned $2.2 billion in net income on $25.2 billion in revenue. That represents a 7 percent increase year over year compared to $23.4 billion in revenue in Q3 2023, and a 17 percent increase in net income, somewhat beating expectations. Analyst consensus predicted Tesla’s quarterly profit would fall 9 percent in Q3, while revenues would rise 9 percent, according to FactSet.
The revenues the company receives from selling regulatory credits to other companies continued to perform strong. Tesla said it was its “second-highest quarter of regulatory credit revenues as other OEMs are still behind on meeting emissions requirements.”
The company’s gross margins were in the spotlight again, as bullish investors hoped to see improvements after months of steady decline. Rampant price cutting and cooling demand as well as cheaper financing have pushed the company’s once-vaunted margins to their lowest point in six years.
Still, there were some positive signs of recovering. The company reported 19.8 percent gross margins based on generally accepted accounting practices, slightly more than the 18 percent reported last quarter and up slightly from Q3 2023. And Tesla said its cost per vehicle were at a record low to $35,100.
The company reported 19.8 percent gross margins
The earnings come after Tesla reported a smaller-than-expected rise in third quarter deliveries, sending its stock price tumbling. The company said it delivered 462,890 vehicles to customers during the quarter, a 6.3 percent jump from Q2 2023. But analysts had been expecting more deliveries, and now fear that the company could be heading toward its first annual decline in deliveries after years of rapid growth.
In its earnings report, Tesla boasted that it had produced its 7 millionth vehicle on October 22nd, and that the Cybertruck had become the third best-selling EV in the US, after the Model Y and Model 3. The Cybertruck had also reached “positive gross margins for the first time.”
During a conference call with investors, Musk said his “best guess” was that vehicle growth would reach 20-30 percent next year, citing “lower costs” and the “advent of autonomy.” Musk also said that Tesla was testing its ride-hailing app with employees in the Bay Area, with plans to launch a paid service in 2025.
Tesla has been grappling with rising competition and slowing demand for EVs. The company’s vehicles are selling strongly in China, but Tesla is still facing fierce competition from BYD and others in the world’s largest EV market.
Meanwhile, Elon Musk’s attempts to pivot the company to primarily one that sells robots and autonomous vehicles is facing a lot of skepticism. Tesla showed off several flashy concepts at its robotaxi event earlier this month, but declined to share specifics about how the technology would work. The company’s stock price plummeted after the event – but is soaring in post-market trading following this earnings report.
