Tesla shares jump 9% as profit tops Wall Street expectations

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Tesla’s quarterly profit beat analysts’ estimates and it forecast a “slight growth” in deliveries this year, pushing the stock of the world’s largest electric vehicle maker about 9 per cent higher in after-hours trading.

The performance marks a turnaround for Tesla, which has endured a few disappointing quarters as concern spread about slowing global demand for EVs. The company has been overshadowed by the political activism of its chief executive, Elon Musk, as well as a court battle over his $56bn package of share options.

The stock has almost halved since its November 2021 peak, but its still the most valuable global carmaker at $669bn.

Adjusted net income for the quarter rose 8 per cent from a year ago to $2.5bn, exceeding expectations for $2.1bn, according to a filing from the Austin, Texas-based company on Wednesday. Revenue rose 8 per cent to $25.2bn, slightly undershooting the average $25.4bn estimate.

The earnings were driven by a slight 2 per cent increase in revenue from vehicle sales — which contributes four-fifths of group income — but also a 52 per cent jump at its energy generation and storage business and 29 per cent increase its services arm, which includes its supercharger network.

Analysts also flagged an improvement to Tesla’s gross margin, which widened to 19.8 per cent in the quarter from 17.9 per cent in the same period last year.

The closely watched financial metric was flattered by $739mn of revenue from regulatory credits, which it sells to other manufacturers that do not meet EV production-related emissions targets. That was its second-highest ever after the record $890mn in the second quarter

“Despite ongoing macroeconomic conditions, we expect to achieve slight growth in vehicle deliveries in 2024,” Tesla said. “Plans for new vehicles, including more affordable models, remain on track for start of production in the first half of 2025.”

Tesla said that Cybertruck production reported a positive gross margin for the first time — a milestone after years of production delays and recalls — and was the third best-selling EV in the US behind its Model Y and Model 3. The company added that its “Semi” electric truck factory would start production by the end of next year.

Earlier this month, Tesla reported that deliveries rose 6.4 per cent in the third quarter to 462,890 vehicles globally, driven by a surge in Chinese sales that offset weak demand in Europe. While the company retained its position as the top EV maker ahead of China’s BYD, the figures fell slightly short of analysts’ expectations.

Musk has made a strategic pivot towards autonomous driving, artificial intelligence and robotics, telling investors that these technologies would soon be Tesla’s main revenue sources and drive up its valuation. He recently unveiled a prototype for a new fleet of self-driving “cybercabs” that he hopes to have in production before the start of 2027.

However, a lack of engineering or financial details in the splashy “We, Robot” event — held at a movie studio in Los Angeles, where Tesla’s “Optimus” humanoid robots danced to Daft Punk and served beer to attendees — disappointed analysts and investors and the stock fell 9 per cent in the aftermath. 

On Wednesday, Tesla also provided an update on the number of Nvidia H100 graphics processing unit chips installed at its Texas manufacturing plant used to train the AI systems that underpin its self-driving technology, called FSD. It said 29,000 were already installed in a cluster at the Gigafactory and this would increase to 50,000 by the end of October.

Musk has also courted controversy for his robust backing of presidential candidate Donald Trump, donating at least $75mn to a pro-Republican group America Pac and personally hosting rallies and town halls in swing states. He is giving away $1mn a day to registered voters in swing states who sign a petition backing free speech and the right to bear arms.  

In return, Trump has pledged to make Musk head of a “department of government efficiency” that would make suggestions for cutting spending, bureaucracy and regulations, a position that could benefit his other companies including SpaceX and social media network X.

However, if Trump loses the election, Musk’s political activities risk provoking the ire of Democratic candidate Kamala Harris.