Tesla (TSLA) Q3 2024 Earnings Report

Tesla reported third-quarter profit on Wednesday that beat analysts' estimates, although revenue fell just short of expectations.

Here's what the company reported compared to Wall Street's expectations, based on an LSEG analyst survey:

• Earnings per share: 72 cents, adjusted versus 58 cents expected
• Revenue: $25.18 billion versus expected $25.37 billion

Revenue rose 8% in the quarter from $23.35 billion a year ago. Net income rose to about $2.17 billion, or 62 cents per share, from $1.85 billion, or 53 cents per share, a year earlier.

Margins were strengthened during the quarter by $739 million in auto adjustment loan revenue. Automakers are required to receive a certain amount of regulatory credits each year. If they can't meet the goal, they can purchase loans from companies like Tesla, which has excess credit because it only makes electric vehicles.

By producing electric or “zero emissions” vehicles, they can purchase them from others who have credits to sell. Since Tesla only makes electric cars, the company has plenty of excess regulatory credits and is essentially selling them at a 100% profit.

Automotive sales rose 2% to $20 billion from $19.63 billion in the same period last year. Energy generation and storage revenue rose 52% to $2.38 billion, while services and other revenue, which includes revenue from out-of-warranty repairs to Tesla vehicles, rose 29% to $2 .79 billion US dollars rose.

In a shareholder presentation, Tesla boasted that it reached 7 million vehicles produced on October 22 and that its latest offering, the Cybertruck, became the third best-selling all-electric vehicle in the U.S., behind only the Model 3 and Model Y. Tesla does not break down sales by model.

While Tesla's boxy steel pickup truck struggled with quality issues, the company still sold more than 16,000 Cybertrucks in the U.S. in the third quarter, according to Kelley Blue Book estimates. Tesla said in the press release that the Cybertruck “achieved positive gross margin for the first time.”

Earlier this month, Tesla reported third-quarter vehicle deliveries of 462,890 vehicles. Deliveries are the closest to Tesla's reported sales. The company also said it produced 469,796 electric vehicles in the period ended September 30.

While shipments increased 6% year-over-year, they fell short of analyst expectations and posted two straight quarters of year-over-year declines. Tesla offers a range of discounts and incentives to boost sales.

“Despite ongoing macroeconomic conditions, we expect vehicle deliveries to grow slightly in 2024,” the company said in its earnings presentation on Wednesday. The company also reiterated its goal to “launch” cheaper models in the first half of 2025.

Tesla faces increasing competitive pressure, particularly in China, from companies like BYD and Geely, as well as a new generation of automakers including Li Auto and Nio. Old car manufacturers in the USA ford And General Motors are starting to sell more electric vehicles despite rolling back previous electrification commitments.

The earnings report comes less than two weeks after a highly anticipated robotaxi event that has left shareholders wanting more details, and lands about two weeks before the presidential election, which has taken up much of CEO Elon Musk's schedule of late when he campaigned for President Donald Trump.

According to questions from investors on the online platform Say Technologies, a significant number of shareholders want to know how Musk's pro-Trump activism will affect Tesla and its stock price.

Before Wednesday's after-hours rally, the stock had fallen 18% in October and was heading for its worst month since January. For the year, shares fell 14%, while the Nasdaq gained 22% in that period.

Musk has spent tens of millions of dollars trying to get Trump back into the White House, even though the former president doesn't support the kinds of federal spending on electric vehicles, charging infrastructure and environmental regulations that have benefited Tesla for years.

Musk also said at a recent event in Harrisburg, Pennsylvania that he believes many government agencies and regulations in the United States are ineffective and unnecessary.

REGARD: Tesla margins are expected to decline slightly