Tesla shares take off on strong earnings as Cybertruck finally makes a profit

Tesla reported third-quarter earnings that surpassed analysts' expectations, sending its shares up more than 12% in after-hours trading. CEO Elon Musk expects that its core business, automotive deliveries, will return to growth after declining in the past few quarters, as demand rebounds.

After a significant slump earlier this month, Tesla's stock has regained its footing. However, its share price remains down 4% year-to-date even after the surge, marking it the worst performance among the Magnificent Seven group. Below are the key highlights from Tesla's third-quarter earnings call.

Tesla's earnings return to growth

Tesla reported earnings per share of $0.72 (€0.67), beating analysts' expectations of $0.58 (€0.54) and marking a 9% increase from a year earlier, following four consecutive quarterly declines.

Its gross margin rose to 19.8%, the highest since the first quarter of 2023, thanks to a $739m (€685m) regulatory credit. Tesla's core business, automotive revenue, rose 2% year-on-year, returning to growth after declines in the previous two quarters. Total revenue climbed 8% year-on-year, marking the strongest growth in a year.

In the third quarter, Tesla delivered 462,890 electric vehicles, representing a 6.4% year-on-year increase, and a return to growth after two consecutive quarterly declines.

This was also the highest figure for a third quarter and the third-largest quarterly total in the company's history. In the earnings report, the company stated it "expects to achieve slight growth in vehicle deliveries in 2024."

Elon Musk anticipates automotive deliveries to grow by 20%-30% in 2025, signalling a rebound in demand for electric vehicles.

Energy Storage Continues to Grow

A notable highlight is Tesla's Energy business, which continued its rapid growth, with revenue increasing by 52% year-on-year in the third quarter.

"The Energy business achieved a record gross margin of 30.5% in the third quarter," the company stated.

This segment now contributes nearly 10% of Tesla's overall revenue. However, it remains a critical part of the business, as other car makers need to adapt to Tesla's charging infrastructure.

The company expects "energy storage deployments to more than double year-on-year in 2024."

Cybertruck becomes profitable, affordable car production on track

In its earnings report, Tesla noted: "Cybertruck production increased sequentially and achieved a positive gross margin for the first time."

Cybertruck deliveries began late last year, and according to Kelley Blue Book, Tesla may have sold 16,000 units in the US during the third quarter.

Additionally, the company indicated that production of its affordable car is on track, expected to begin in the first half of 2025, with volume anticipated to grow by 50%.

Tesla stated: "This approach will result in less cost reduction than previously expected but enables us to prudently grow our vehicle volumes in a more capex-efficient manner during uncertain times.

This should help us fully utilise our current expected maximum capacity of close to three million vehicles, enabling more than 50% growth over 2023 production before investing in new manufacturing lines."

Robotaxi and full self-driving (FSD)

CEO Elon Musk mentioned plans to launch autonomous ride-hailing services in Texas and California, with the potential for expansion to other states by 2025.

This aligns with the ambitious plans outlined at the Robotaxi event earlier this month. Musk also indicated that mass production of the Cybercab could begin in 2026, or possibly earlier.

In the second-quarter earnings call, Tesla aimed to launch FSD in China and Europe by the first quarter of 2025, pending regulatory approval. However, Elon Musk suggested the company could secure approval by the end of this year.