Tesla shares rise 13% after CEO Elon Musk announces his sales forecast

Shares of Tesla rose more than 13% before the opening bell on Thursday after CEO Elon Musk told investors he expects the company's electric vehicle sales to rise 20% to 30% next year as it prepares for the Introduction of more affordable models is underway.

Tesla, whose market capitalization reached nearly $670 billion at the close of trading on Wednesday, is poised to increase its value by another $80 billion on Thursday thanks to the optimistic forecast that calls for “slight growth” in deliveries this year .

The company said it earned $2.17 billion in the three-month period from July to September – more than its profit of $1.85 billion in the same period last year.

According to Reuters calculations, Tesla's profit margin on vehicle sales (excluding regulatory credits) rose to 17% in the third quarter from 14.6% in the previous three-month period.

Wall Street had expected 14.9%, according to 24 analysts surveyed by Visible Alpha.

The EV giant said labor and material costs to produce vehicles, known as the cost of goods sold per vehicle, fell to its lowest level ever, about $35,100.

Adjusted earnings of 72 cents per share in the third quarter beat an average estimate of 58 cents.

Wall Street was unfazed by Tesla's unveiling of its robotaxi earlier this month, but analysts were reassured by Musk during a conference call on Wednesday in which he pointed out that the cost of producing vehicles had fallen.

“No electric vehicle company is profitable at all,” Musk told analysts on Wednesday.

“And to my knowledge, there was no EV department at any company or existing car company that was profitable. Therefore, it is notable that Tesla is profitable despite a very challenging automotive environment.”

Shares of Tesla's smaller EV rivals – Rivian and Lucid – each rose 1% to 2% in premarket trading on Thursday.

Musk said Tesla will launch self-driving vehicles with paid rides next year after the company receives regulatory approval in California and Texas.

He said adoption – and sales – of the company's supervised autopilot software, known as Full Self-Driving, increased significantly after the Robotaxi event.

Tesla again this month offered FSD free for a month to its current customers, for the second time this year.

After drastic price cuts last year, Tesla began offering lucrative financing options this spring to stimulate demand.

1.29 million vehicles were already delivered in the first nine months of this year.

In order to exceed last year's record, a further 514,925 vehicles must be handed over.

“There were fears leading up to the results that the huge incentives to drive volume into the highly competitive electric vehicle market would significantly erode margins – that doesn't appear to be the case,” said Matt Britzman, a senior equity analyst at Hargreaves Lansdown, who also works personally owns Tesla shares.

Revenue in the July-September quarter was $25.18 billion, compared with estimates of $25.37 billion, according to data compiled by LSEG.

In the corresponding quarter of 2023, a revenue of $23.35 billion was reported.

Tesla said it had its second-highest quarter of regulatory credit revenue.

This metric increased 33% year-over-year to $739 million, but decreased from $890 million in the second quarter.

With post wires