New York (AFP) – Tesla shares surged Wednesday after the electric car maker reported a jump in profits, as increased auto sales and lower expenses offset the drag from a drop in vehicle prices. The company, led by Elon Musk, reported third-quarter profits of $2.2 billion, up 17 percent from the year-ago period on an eight-percent increase in revenues to $25.2 billion. The results broke a string of recent Tesla earnings that have seen the high-flying company report lower profits year-over-year as competition intensifies among automakers.
The outspoken Musk offered a bullish outlook on Tesla’s prospects, pointing to the strong results as evidence the company’s ambitious vision is being realized. “Tesla is focused on building the future of energy, transport, robotics and AI, and this is a time when others are just focused on managing around near term trends,” Musk said on an earnings call. Tesla had previously announced a six-percent rise in vehicle sales. A major question coming into Wednesday was the company’s ability to manage profitability after slashing vehicle prices over the last year or so in response to increased offerings from other companies in the electric vehicle industry.
Tesla’s results benefited from lower cost-per-vehicle, stemming from a dip in material costs and freight expenses, the company said. Tesla said it expects “slight growth” in 2024 deliveries “despite ongoing macroeconomic conditions.” In July, the company had said volume growth “may be notably lower” than in 2023, when deliveries surged 38 percent. Musk expects a 20 to 30 percent rise in auto sales in 2025, when the company also expects to unveil autonomous ride-hailing in Texas and perhaps California. The California venture is “contingent on regulatory approval,” Musk said, describing Texas’ regulatory climate as more straightforward. Shares of Tesla jumped nearly 12 percent in after-hours trading.
Heading into Wednesday, the company’s shares were down about 14 percent for 2024, however. Besides earnings disappointments earlier in 2024, Musk has been under pressure to demonstrate new Tesla products to wow consumers. A heavily-touted launch event earlier this month in Los Angeles showing off its autonomous robotaxi vehicles received mostly lackluster reviews. Following Wednesday’s results, CFRA Research lifted its equity price target for Tesla, noting that “expectations were low heading into the release after four consecutive bottom-line misses and a ‘Robotaxi Day’ that left investors with more questions than answers.”
Musk has also stood out among major corporate figures with his activism in the 2024 presidential election on behalf of Republican candidate Donald Trump. Musk’s efforts have gone well beyond the practice of contributing funds to preferred candidates. The billionaire has appeared on the stump with Trump, including at a rally in Butler, Pennsylvania earlier this month in which Musk—donning a black “Make America Great Again” hat—was photographed literally jumping for joy in support of the ex-president. More recently, Musk has unveiled a lottery to give $1 million a day to registered voters in swing states, in a gambit that some experts suspect breaches US campaign laws.
Musk’s support of Trump also poses questions as to its effect on the Tesla brand, given the polarized state of the US electorate. On Wednesday’s call, Tesla officials read questions from investors they screened. They also took two questions from Wall Street analysts without disclosing if there were ground rules on what could be asked. Democratic vice presidential candidate Tim Walz took a shot at Musk on Tuesday night during a campaign rally in Wisconsin, noting that Trump could appoint Musk to a post that influences the regulation of the billionaire’s business. Walz stated that Musk could “spend billions to make more than $10 billion on the back-end,” adding, “So in other words, Donald Trump, in front of the eyes of the American public, is promising corruption.”
Musk shot back at Walz on his X platform, posting to the former Twitter a picture of a lost-looking Walz captioned, “Who Am I…Why am I here?”
© 2024 AFP
