Tesla shares closed up nearly 22% on Thursday, their biggest single-day gain in more than a decade, as Elon Musk’s bold forecast of rising sales reassured investors that it was still looking to grow its core business of selling electric cars. At closing, nearly $150 billion was added to the company’s market value.
Musk forecast sales growth of 20-30% next year, promising to launch an affordable vehicle in the first half of 2025, and said efforts to cut production costs boosted margins in the third quarter.
The stock rose to a session high of $262.2 on volumes of approximately 200 million shares. It was the biggest gain since May 2013 and erased recent losses on concerns that Musk was distracted by new projects such as the recently unveiled robotaxi.
Musk has been turning Tesla into an artificial intelligence and robotics company from an electric vehicle market leader, but has yet to lay out a detailed business plan for his new approach. Investors sold off Tesla shares earlier this month after a robotaxi event lacked details.
“With the stock selling off in October ahead of its earnings announcement, some bears feel this is more of a relief rally since results were better than feared,” said Ed Egilinsky, managing director of the investment company Direxion.
Last quarter, Musk made bold announcements about everything but cars – from driverless taxis to humanoid robots – leaving investors worried about shrinking margins already squeezed by falling prices.
“He definitely seemed more passionate and invested in it this time,” said Jessica Caldwell, chief insight officer at auto research and buying website Edmunds.
“I feel like a lot of Tesla is tied to the future, but we have to figure out how to get there. “That’s what people needed to hear and they provided those details a little better than in the past.”
Tesla reported a third-quarter margin that handily beat Wall Street expectations and said the costs of labor and materials to make vehicles – known as the cost of goods sold per vehicle – fell to their lowest level ever recorded. around $35,100.
It posted $326 million in revenue from its autopilot software called Full Self Driving (FSD) used in the Cybertruck and other autonomous features.
“FSD played a role in the margin expansion, but I think the most important factor was the reduction in unit production costs… Over time, FSD should drive further margin expansion in the long term,” said Seth Goldstein , equity strategist at Morningstar.
FSD is the basis of Tesla’s robotaxis.
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Musk said he expects Tesla vehicles to offer paid and driverless transportation services next year, doubling down on a promise he made at the robotaxi event. But that plan is likely to face significant regulatory challenges.
Not all investors are likely to be mollified by Tesla’s assurances on Wednesday.
Ross Gerber, CEO of Gerber Kawasaki Wealth and Investment Management and a prominent Tesla investor, said robotaxis and artificial intelligence were not the core businesses he wanted Musk to focus on.
“The days were good when Elon slept in the factory. He was there every day, working. Not going to Trump rallies, of all the things you could be doing,” Gerber said, referring to Musk’s much-publicized support for the Republican presidential candidate.