(Bloomberg) — Elon Musk easily added $80 billion to Tesla Inc.’s market value. in a blowout quarter for EV makers, which posted their most profitable results in more than a year.
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Third-quarter earnings were boosted by sales of the Cybertruck, which turned profitable for the first time, its energy storage business and a surge in regulatory tax credits paid by other automakers to meet emissions rules. But the stock also offered hope for the future: An ebullient Musk spent a long part of Wednesday’s call in a monologue promising to make Tesla the world’s most valuable company, starting with delivery growth of 20% to 30% next year. .
Musk, who is known for not having overly optimistic timelines, said Tesla aims to launch official ridesharing in Texas and California next year. Although driving on public roads requires regulatory approval, Musk’s comments sent shares in rival Uber Technologies Inc. and Lyft Inc.
Musk also said that production of the dedicated robotaxi, called Cybercab, will reach volume production in 2026 and that the company is aiming for at least 2 million units – and “maybe 4 million eventually.”
“Investors who want something today are getting better-than-expected returns and guidance for delivery development,” said Gene Munster, managing partner of Deepwater Asset Management. “Long-term investors get a golden carrot.”
Musk also said Tesla is on track to roll out an affordable model next year, but disabused the long-held expectation by some investors that the company will roll out electric vehicles to compete with mass market autos such as the Toyota Corolla. Instead, Musk said EV makers are focusing on the autonomous Cybercab, which will start around $30,000. A regular $25,000 EV would be “pointless,” Musk said, noting that all Tesla cars produced will have autonomous capabilities.
The billionaire also used the earnings call for his publicly traded company to tell what he would potentially do under the Trump administration if the former president returns to the White House. While Musk did not mention Trump by name, he referred to the role of the “government efficiency department” that the Republican presidential candidate has since floated for the Tesla CEO after Musk directed more than $75 million to his campaign. If appointed, Musk said it would pave the way for federal approval of autonomous vehicles instead of the current patchwork of state regulations.
Tesla shares rose 12% in postmarket trading in New York, potentially erasing much of the 14% decline the stock has posted so far through late Wednesday.
‘Grow Up A Little’
The automaker described “slight growth” in vehicle deliveries during the year. It needed a record-breaking fourth quarter to overcome Tesla’s slump in the first half of the year.
Tesla said the Cybertruck, which first delivered late last year, has been boosted by increased production. The company has not said how many trucks have been sold, but recalls show the company has shipped at least 27,000 in the US.
Seth Goldstein, an analyst with Morningstar, said Tesla is benefiting from higher volumes and more stable prices. “Prices are stable and unit costs are down,” he said in an interview.
For the third quarter, Tesla reported adjusted earnings of 72 cents per share, beating the average analyst estimate and snapping four consecutive quarters in which the measure missed expectations. The company’s third-quarter automotive gross margin, excluding regulatory credits, was 17.1%, beating analysts’ estimates and up from the previous quarter, when it was 14.6%.
Low expectations
Tesla’s strong earnings report came less than two weeks after a glitzy event dedicated to the company’s new robotaxi, which disappointed many investors.
Garrett Nelson, an analyst with CFRA Research, said investors had a low bar for this quarter and asked whether Tesla could sustain the level of profitability.
“Expectations were low heading into the release after four consecutive bottom-line misses and Robotaxi Day that left investors with more questions than answers” Nelson said in a research note for clients.
Tesla said the increased profits were due to higher delivery volumes as well as the sale of regulatory credits to other automakers that need help meeting emissions requirements. Revenue from regulatory credits came to $739 million in the three months ended September 30 – a record for the period but below the $890 million it earned in the second quarter.
The company also cited its energy business as a revenue driver. Tesla has deployed more storage products this year than in all of 2023, including 6.9 gigawatt hours of storage this quarter.
The company is also expanding its charging network following the high-profile layoffs of many of its supercharging teams earlier this year. The company added 2,800 new kiosks in the third quarter, a 22% increase from the previous year.
Robot taxi
In robotaxi, Tesla’s vehicle without controls such as pedals or a steering wheel, the company will use a new non-box manufacturing technique, which differs from traditional production lines by assembling parts together in special areas before assembling everything at the end.
Musk said that he also expects autonomous versions of other vehicles: “There is no need to wait for robotaxi or Cybercab to experience full autonomy. We hope to achieve it with the existing range of vehicles.
He even hinted at an air taxi when asked about the slow development of the promised Roadster model. The CEO said Tesla remains focused on mass-market vehicles as part of its sustainability goals, but indicated his company is “close to finalizing the design” on the vehicle. He added that Peter Thiel — Musk’s fellow billionaire and venture capitalist — lamented the lack of flying cars, which Musk thinks “we’ll see.”
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