Tesla shares surged 7% after hours, adding nearly $50 billion in market value, as investors cheered what looked like improvements in Tesla's core business of selling cars. The stock had closed down 2% on Wednesday.
CEO Elon Musk has been focused on transforming Tesla from a pure-play EV maker to a leading force in autonomous driving and artificial intelligence. But the company's robotaxi event earlier this month left investors desiring more details on how the company plans to do so.
Investors slammed shares the next day, punishing Tesla for the conspicuous absence of a concrete business plan. This month Tesla's stock has tumbled nearly 20% and Wednesday's report card and forecast will offer shareholders some respite.
"Despite sustained macroeconomic headwinds and others pulling back on EV investments, we remain focused on expanding our vehicle and energy product lineup, reducing costs and making critical investments in AI projects and production capacity," Tesla said in a statement.
The company said it delivered growth in vehicle deliveries in the third quarter, resulting in record volumes. It also recognized its second-highest quarter of regulatory credit revenues.
Tesla said that the labor and material costs of making vehicles, known as the cost of goods sold per vehicle, dropped to its lowest level ever, about $35,100. Adjusted profit of 72 cents per share in the third quarter beat an average estimate of 58 cents.
Prices of raw materials used to make EV batteries have been falling and Tesla has said its costs will decline as a result this year, with the effect diminishing over time.
Its third-quarter profit margin from vehicle sales, excluding regulatory credits, grew to 17.05% from 14.6% in the prior three-month period, according to Reuters calculations.
Wall Street had expected the figure to be 14.9%, according to 24 analysts polled by Visible Alpha.
Tesla said earlier this month that its September-quarter deliveries grew by more than 6% on a year-over-year basis, marking the first quarter of growth after a decline in the January-June period.
The company slashed prices last year, leading to a sharp decline in profit margins. This spring, it shifted its strategy to offering cheaper financing options and discounts that analysts have said could slow its margin bleed over the coming quarters.
"The fear going into results was that the huge incentives effort to push volumes into the tough EV market would materially dent margins – that doesn’t look the be the case," said Matt Britzman, a senior equity analyst at Hargreaves Lansdown who also personally owns Tesla shares.
Revenue for the July-September quarter was $25.18 billion, compared with estimates of $25.37 billion, according to data compiled by LSEG. It reported sales of $23.35 billion in the corresponding quarter of 2023.
