"After-Hours Surge" Tesla, Overcoming the Chasm...? Musk: "Next Year's Sales Up 30%" (Summary)

Tesla Soars 11% in After-Hours Trading on Strong Earnings
Earnings Per Share Exceed Analyst Estimates
Musk: "Launching Affordable EV Next Year, Starting Ride-Sharing Service"

"Tesla vehicle deliveries will grow by 20-30% next year."

This statement was made by Elon Musk, CEO of Tesla, immediately after the company announced third-quarter net profits that exceeded market expectations on the 23rd (local time). It reflects confidence that Tesla will fully overcome the 'chasm (temporary demand slowdown)' caused by competition with low-cost Chinese electric vehicles. Musk also outlined goals to transform Tesla into a full-fledged transportation, artificial intelligence (AI), robotics, and energy company by launching a vehicle-sharing service next year and starting mass production of autonomous robo-taxis the following year. The market responded with immediate enthusiasm, with Tesla's stock price surging over 12% in after-hours trading.

On the 6th, Tesla's 'Cybertruck' was unveiled for the first time in Korea at the '2024 Auto Salon Week' held at Kintex in Goyang, Gyeonggi Province. Photo by Jinhyung Kang aymsdream@

Musk: "Low-cost electric car launch in the first half of next year"

During the conference call following Tesla's earnings announcement that afternoon, CEO Musk stated, "Tesla's deliveries are expected to increase by 20-30% next year," adding, "I will make Tesla the most valuable company in the world." Based on these remarks, Bloomberg estimated that Tesla's deliveries in 2025 could roughly reach 2.16 to 2.34 million units. This year’s deliveries are also expected to show a slight increase. Although deliveries in the first and second quarters had declined compared to the same period last year, the third-quarter deliveries released earlier this month showed an increase of more than 6% year-over-year.

CEO Musk confirmed that Tesla’s own low-cost electric vehicle is also scheduled for release in the first half of next year. While the price of BYD’s budget model 'Seagull,' a low-cost electric vehicle produced in China, is under $10,000, Tesla’s cheapest 2024 'Model 3' starts in the high $30,000 range in the U.S., leading to assessments that Tesla has lagged behind in price competition. However, Musk emphasized that "a $25,000 electric car is meaningless," indicating that Tesla’s electric vehicles will not drop below a certain price point.

The autonomous robo-taxi prototype 'Cybercap,' which received lukewarm reviews at a recent unveiling event, is planned to begin mass production in 2026 with a target of selling 2 million units annually. However, autonomous vehicles require government approval. Regarding this, Musk stated, "If former President Donald Trump (the Republican presidential candidate) wins the election, a Department of Government Efficiency (DOGE) could be established, which could push forward approvals related to autonomous vehicles."

Musk also emphasized that Tesla could obtain regulatory approval to start ride-sharing services next year. As a result, the stock prices of ride-sharing companies Uber and Lyft both fell more than 2% in after-hours trading.

Third-quarter net profit exceeds market expectations

In the third-quarter earnings report released after market close, Tesla announced revenue of $25.182 billion and earnings per share (EPS) of $0.72. Revenue fell short of Wall Street’s estimate ($25.37 billion), but EPS exceeded expectations ($0.58). Net profit was $2.167 billion, up 17% from $1.853 billion in the same period last year, surpassing analysts’ forecast of 14.9%.

Tesla’s net profit had been declining after engaging in price-cutting battles with Chinese electric vehicle manufacturers last year. However, due to strong sales of regulatory credits and energy storage system (ESS) business, along with reduced cost of goods sold, net profit did not decline as much as expected, analysts say.

The production cost per vehicle hit a record low of $35,100. The significant drop in lithium prices, used in electric vehicle batteries, played a key role in improving profitability. Additionally, the Cybertruck was confirmed to have turned a profit for the first time in the third quarter.

Alongside this, Tesla plans to spend over $10 billion in capital expenditures this year to expand data centers and improve software, which will be crucial for the future of autonomous driving. In a statement, Tesla emphasized, "Despite ongoing macroeconomic headwinds and setbacks in electric vehicle investments, Tesla continues to focus on expanding its vehicle and energy product lineup, cost reduction, AI projects, and production capacity investments."

Tesla’s stock closed at $213.65 per share, down 1.98% from the previous trading day in regular market hours, but surged in after-hours trading. Following the third-quarter earnings announcement, the stock rose about 9%, and by the end of Musk’s remarks, it had climbed over 12%.