Elon Musk’s Tesla surprises with blowout quarter; shares soar 12%
Sign up now: Get ST's newsletters delivered to your inbox
Tesla reported third-quarter earnings of US$2.2 billion (S$2.9 billion), up 17 per cent from the year-ago period.
PHOTO: NYTIMES
New York - Tesla shares surged on Oct 23 after the electric vehicle (EV) maker reported a jump in profit, as increased auto sales and lower expenses offset the drag from a drop in vehicle prices.
The company surpassed Wall Street estimates for earnings in the third quarter and projected a slight increase in deliveries for the current year, reflecting a rebound in demand for its vehicles.
It reiterated plans to start production of more affordable models in the first half of 2025, saying it projects 50 per cent growth in 2025 over its 2023 production volumes.
The company, led by Mr Elon Musk, reported third-quarter earnings of US$2.2 billion (S$2.9 billion), up 17 per cent from the year-ago period, as revenue rose 8 per cent to US$25.2 billion.
The results broke a string of recent Tesla earnings that have seen the high-flying company report lower profits year on year as competition intensifies among automakers.
The outspoken Mr Musk offered a bullish outlook on Tesla’s prospects, pointing to the strong results as evidence the company’s ambitious vision is being realised.
“Tesla is focused on building the future of energy, transport, robotics and artificial intelligence, and this is a time when others are just focused on managing around near-term trends,” Mr Musk said on an earnings call.
Tesla had previously announced a 6 per cent rise in vehicle sales.
A major question coming into Oct 23 was the company’s ability to manage profitability after slashing vehicle prices over the last year or so in response to increased offerings from other companies in the EV industry.
Tesla‘s results benefited from lower cost-per-vehicle, stemming from a dip in material costs and freight expenses, the company said.
Tesla said it expects “slight growth” in 2024 deliveries “despite ongoing macroeconomic conditions”. In July, the company had said volume growth “may be notably lower” than in 2023, when deliveries surged 38 per cent.
Mr Musk expects a 20 per cent to 30 per cent rise in auto sales in 2025, when the company also expects to unveil autonomous ride-hailing in Texas and perhaps California.
The California venture is “contingent on regulatory approval”, Mr Musk said, describing Texas’ regulatory climate as more straightforward.
Shares of Tesla jumped nearly 12 per cent in after-hours trading on Oct 23.
Heading into Oct 23, the company’s shares were down about 14 per cent for 2024, however. Besides earnings disappointments earlier in 2024, Mr Musk has been under pressure to demonstrate new Tesla products to wow consumers.
A heavily touted launch event earlier this month in Los Angeles showing off its autonomous robotaxi vehicles received mostly lacklustre reviews.
Mr Seth Goldstein, an analyst with Morningstar, said Tesla is benefiting from higher volumes and more stable prices.
Mr Garrett Nelson, an analyst with CFRA Research, said investors had a low bar for this quarter and questioned whether Tesla can sustain that level of profitability.
“Expectations were low heading into the release after four consecutive bottom-line misses and a Robotaxi Day that left investors with more questions than answers,” Mr Nelson said in a research note to clients.
Boosting Trump
Mr Musk has also stood out among major corporate figures with his activism in the 2024 presidential election on behalf of Republican candidate Donald Trump. Mr Musk’s efforts have gone well beyond the practice of contributing funds to preferred candidates.
The billionaire has appeared on the stump with Mr Trump, including at a rally in Butler, Pennsylvania, earlier in October in which Mr Musk – donning a black Make America Great Again hat – was photographed literally jumping for joy in support of the former president.
More recently, Mr Musk has unveiled a lottery to give US$1 million a day to registered voters in swing states, in a gambit that some experts suspect breaches US campaign laws.
Mr Musk’s support of Trump also poses questions as to its effect on the Tesla brand, given the polarised state of the US electorate. AFP, BLOOMBERG
