Tesla Reports Strong Q3 Earnings Driven by Cost Reductions

Tesla exceeded earnings expectations in the third quarter of 2024, primarily due to significant manufacturing cost reductions, sending its shares up 9% in after-hours trading. The electric vehicle maker reported earnings of $2.5 billion, or 72 cents per share, surpassing analysts’ expectations of 59 cents per share and marking an 8% increase from the previous year.

Despite modest vehicle sales growth of 6% – well below its historical 50% growth rates – Tesla managed to improve profitability by reducing its per-vehicle production costs to a record low of $35,100, representing a 6% ($2,400) reduction from the previous year. This cost efficiency helped offset the impact of recent price cuts implemented to remain competitive, particularly against Chinese manufacturers.

Revenue growth came from diverse sources, with traditional automotive revenue up only 1% year-over-year. However, the company saw significant gains in other areas:

• Regulatory credit sales increased 33% ($185 million)
• Energy products revenue nearly doubled, up 93% ($1.5 billion)

Looking ahead, CEO Elon Musk projected 20-30% growth in vehicle sales for the next year. The company also reported progress on several fronts:

• The controversial Cybertruck achieved profitability for the first time, despite facing multiple recalls
• New, more affordable models are planned for early 2025, though the company has historically struggled to meet such deadlines