Tesla shares saw a 12% rise after the company reported its third-quarter earnings on Wednesday. The electric car maker was able to bounce back from a difficult second quarter, beating Wall Street expectations for earnings per share. The company reported earnings per share of $0.72, beating investors’ projection of $0.60.
At the end of the second quarter, Tesla CEO Elon Musk said the nearly 50% drop in profits was temporary and was due to difficulty competing with cheaper or cut-price electric vehicles by companies. rivals like BYD. “We don’t see this as a long-term issue,” Musk said in July, “but really a fairly short-term issue.”
However, Tesla fell slightly short of expected revenue. The company reported $25.18 billion in revenue at the end of the third quarter, just shy of Wall Street’s revenue projections of $25.43 billion.
“Despite continued macroeconomic and other headwinds that are pulling back on investments in electric vehicles, we remain focused on expanding our lineup of energy vehicles and products, reducing costs, and making critical investments in artificial intelligence projects and production capacity,” the company said in a press release. “We believe these efforts will allow us to capitalize on the transition underway in the transportation and energy sectors.”
On Wednesday’s earnings call, Musk said Tesla had a record third quarter and he believes Tesla will become the most profitable company in the world if it executes on its plans.
“Tesla is focused on the future of energy, transportation, robotics and artificial intelligence and this is a time when others are simply focused on managing in close terms,” Musk said. “We believe what we’re doing is the right approach and if we execute on our goals, and I think we will, my prediction is that Tesla will become the most valuable company in the world, probably by far.”
At the moment, he says he doesn’t know of any EV manufacturers that are currently profitable.
Tesla delivered 462,890 vehicles at the end of the third quarter, up from 443,956 in the second quarter. Investors will want to know more about whether the company is on track to match its vehicle deliveries of 1.8 million by 2023. The company said it expected slight growth in vehicle deliveries by the end of the year. Dan Ives of financial services firm Wedbush Securities remains confident. Meeting that goal will be “a solid feat given the numerous tense moments seen during the first half of the year,” he said in a note to investors.
Investors will also be looking for more information on the company’s robotaxis after a disappointing launch event. After unveiling the company’s much-hyped robotaxi earlier this month with scant details, Tesla shares fell just under 9% and wiped more than $60 billion off the company’s value. At the time, Royal Bank of Canada analyst Tom Narayan said in a note to investors that the event was more focused on promoting and marketing Musk’s vision “rather than giving hard numbers for us to model” as expected. at these events.
Musk made some ambitious predictions about the Cybercab transportation network. He said Cybercab would reach production volume in 2026 and that Tesla aimed to produce 2 million a year. He also said Tesla hopes to roll out ride-hailing services to the public in California and Texas next year, “but it depends on regulatory approval,” Musk said. “And maybe a few other states next year, but at least California and Texas.” Musk, who has been campaigning on behalf of Donald Trump, also called for a federal path to regulate autonomous vehicles.
Musk said he also plans to integrate Grok, the generative AI chatbot developed by his startup xAI, into Tesla vehicles. Grok is already integrated into Musk-owned X. He also hinted that Tesla might consider developing flying cars.
Musk may also have to answer for his recent focus on politics. In addition to starting America Pac, X’s CEO has been on the campaign trail on behalf of Donald Trump and has started a daily $1 million giveaway for swing state voters who sign his request. The giveaway has raised legal questions, prompting calls for authorities to investigate Musk and the practice from people like Pennsylvania Gov. Josh Shapiro. It is a federal crime to try to pay people to vote or register to vote.
Musk’s activities appear to be having an impact on consumer confidence around purchasing Teslas. 31 percent of buyers surveyed by Edmunds, a car-buying website, said they are less likely to buy a Tesla because of Musk, while 37 percent of respondents said they were waiting for the election results. to decide whether they would buy a Tesla and 44% of Democratic women said they were not as likely to buy a Tesla because of Musk.
However, overall demand for electric vehicles continues to rise. U.S. electric vehicle market share hit an all-time high of 8.3%, up from 7.5% in the same quarter of 2023, according to Edmunds.
Musk also faces legal scrutiny elsewhere. The EU is considering fining X based on the total sales of SpaceX, Neuralink, xAI and The Boring Company. The block alleges that the social media company failed to address illegal content and misinformation on its platform. Fines can represent up to 6% of a company’s annual revenue. However, Tesla is likely exempt from that fine since it is a public company and is not wholly owned by Musk.