After the Q3 earnings report, Tesla's stock surged, and Wall Street still bought into Elon's pie-in-the-sky promises.

Tesla released its Q3 2024 earnings report at 5:50 AM Eastern Time on October 23, with revenue of $25.2 billion, up 8% year-over-year. The Energy Generation and Storage segment (up 52%) and Services segment (up 29%) contributed significantly.
Profitability: Gross profit increased to $5 billion, with gross margin rising to 20%. Operating profit grew to $2.7 billion, up 54% year-over-year, with operating margin improving to 11%.
Strong free cash flow: Tesla generated $2.7 billion in free cash flow, up 223% year-over-year, demonstrating robust operational efficiency.
EPS: Tesla's diluted earnings per share (EPS) was $0.72, up 9.1% year-over-year, beating analysts' expectations of $0.60.
Tesla's stock surged after the earnings report—Wall Street still bought into Elon's vision.
Although Tesla's revenue slightly missed market expectations, its profitability exceeded forecasts. Analysts had expected revenue of around $25.34 billion, but the actual reported figure was $25.2 billion, slightly below expectations. However, the company's gross margin improved to 20%, and operating profit grew 54% year-over-year, surpassing market expectations. Additionally, Tesla's free cash flow surged by 223%, showcasing strong operational efficiency—another positive highlight.
Earnings call summary:
1. Q3 Performance:
• Order decline: Despite a year-over-year drop in orders, the company remained profitable, with record deliveries.
• Production and deliveries: By the end of Q3, Tesla had produced 7 million vehicles and plans to deliver a more affordable model in the first half of 2025, targeting a 20%-30% growth rate.
• Cost control: Tesla successfully reduced vehicle production costs in Q3 and will continue focusing on this in the future.
• Services growth: Collision repair, parts sales, merchandise, and Supercharger network expansion performed exceptionally well.
2. Future plans:
• Cybercab mass production: The Cybercab will enter mass production in 2026, targeting 2 million units annually, eventually reaching 4 million.
• Full Self-Driving (FSD): Model 3 and Model Y are expected to achieve full self-driving capabilities next year, with ride-hailing services launching in Texas and California—progress is faster in Texas.
• Safety report: Data shows one collision per 700,000 profitable events. FSD capability has improved 10x, with significant AI training advancements. There are no bottlenecks in computing power for FSD and Optimus (humanoid robot).
• Optimus robot: Optimus's flexibility and mobility have improved significantly, especially its hands and forearms, which feature 22 degrees of freedom—surpassing other leading humanoid robot companies. AI capabilities and mass production are Tesla's key advantages in this field.

3. Energy storage business:

• Factory capacity: The Lathrop factory produces 200 Megapacks weekly, with an annual capacity of 40GWh. A second Megapack factory in Shanghai will begin operations in Q1 next year, with an annual capacity of 20GWh, eventually delivering 100GWh of storage equipment.
• Energy deployment: Despite a Q3 decline in energy deployment, margins hit a record high, exceeding 309. Q4 is expected to see growth. Full-year energy deployment is projected to double last year's figures.

4. Financial data:

• Cash flow: Q3 operating cash flow was $6.3 billion, driven by vehicle sales and revenue growth, partly due to lower selling prices and increased revenue from additional features ($326 million). Carbon credit revenue also exceeded $2 billion.
• Regional performance: China outperformed Europe and North America. Tesla will focus on boosting sales to prevent inventory buildup and plans to introduce attractive vehicle financing globally.
• Auto margins: Margin improvements stem from FSD adoption and localized deliveries (reducing transport costs and tariffs). Q4 delivery pressure is high, and interest rate changes may impact deliveries.
• Operating expenses: Despite AI investments offsetting some costs, operating expenses declined. By month-end, Tesla will have 50,000 GPUs (HB100). Full-year capital expenditure is projected at $11 billion, with Q3 capex at $3.5 billion.
5. Future challenges and opportunities:
• FSD advancement: Continued progress in FSD will drive sales and market share growth.
• Production and cost control: Tesla will further reduce production costs to address delivery pressures and interest rate fluctuations.
• AI and energy expansion: Leading technology and scalable production in AI and energy storage will be key competitive advantages.
Tesla's key production, delivery, and infrastructure milestones:
1. Total production: Up 9% year-over-year to 469,796 vehicles in Q3 2024, showing steady growth.
2. Total deliveries: Up 6% year-over-year to 462,890 vehicles in Q3 2024, reflecting strong demand.
3. Model 3/Y production: Up 6%, still the majority of Tesla's output.
4. Other models production: Up 91%, highlighting growth in Model S/X and other vehicles.
5. Energy storage deployment: Up 75% year-over-year, showcasing rapid expansion.
6. Supercharger connectors: Up 22%, emphasizing continued investment in charging infrastructure.
– Tesla's vehicle production and deliveries continue to grow, driven by strong demand for Model 3/Y and other models. The significant increase in other models' production indicates diversification beyond Model 3/Y.
– The energy business is expanding rapidly, with energy storage deployment growth reflecting Tesla's scaling renewable energy solutions.
– Infrastructure development, especially the Supercharger network, keeps pace with growing vehicle numbers to meet charging demand.
Tesla's stock surged after the earnings report—Wall Street still bought into Elon's vision.
Q&A
1. Is Tesla still planning to launch a more affordable model next year? How does this align with the AI roadmap?

Lars Moravy: Tesla plans to launch a more affordable EV in the first half of next year. We're committed to reducing manufacturing costs to promote sustainable transportation. This aligns with the next phase of our AI roadmap—launching Robotaxis to lower the entry barrier for EVs. Robotaxis will significantly reduce upfront costs.
Elon Musk: Yes, post-incentive pricing will be under $30,000—a critical threshold. A $25,000 non-autonomous car doesn't fit Tesla's long-term vision. We believe all future vehicles will be autonomous, with cost-per-mile being key. Future models, like the Cybercab, will lack steering wheels or pedals, focusing solely on autonomy.

2. Updates on the electric truck and FSD readiness?

Lars Moravy: Our Nevada factory is accelerating electric truck production equipment setup, with trial production starting in H2 next year and mass production in H1 2026. Demand is high, especially among key clients. Growth depends on market acceptance.
Elon Musk: Demand is robust—Pepsi drivers, for instance, refuse to return to diesel trucks. All deployed trucks have FSD hardware. We're testing FSD in small batches and will roll it out fully as training completes.

3. Progress on FSD in California and Texas?

Elon Musk: Regulatory processes are ongoing. California is complex, but approval is expected next year, with gradual expansion to other states. All Tesla vehicles meet FMVSS standards—the challenge is state-level regulations. Texas is simpler; California will take longer.

4. Tesla's 2025 plans?

Elon Musk: A key focus is developing lower-cost EVs. Cutting costs by 20% is harder than designing a new car or factory—it's highly complex.
Vaibhav Taneja: Beyond affordable models, we'll expand Shanghai's energy storage factory, grow the Supercharger network, and deploy more storage. Powerwall 3 will launch, 4680 battery production will scale, and our lithium refinery will start, boosting supply chain independence.

5. Robotaxi rollout plans? Is Hardware 3 supported?

Ashok Elluswamy: Developing on Hardware 4 first, then backporting to Hardware 3, is more efficient due to Hardware 4's superior capabilities. Some FSD features may not work on Hardware 3—affected customers will receive free upgrades. Tesla's systems are modular for upgrades.

6. Leveraging extra compute for AI acceleration?

Elon Musk: Unlike LLMs, real-world AI processes vast contextual data (e.g., 7-9 cameras per car) with limited onboard compute. Enhanced training enables complex autonomy despite constraints.
Ashok Elluswamy: We're scaling models and training speed, using real and simulated data. Hardware improvements boost efficiency in handling large-scale data.

On supervision: State regulations vary. We'll phase out supervisors safely, aiming for unsupervised paid rides in some states next year.

The call highlighted Tesla's progress in autonomy, electric trucks, cost reduction, and its commitment to sustainable energy and transport innovation.
Stock movement:
At open, TSLA surged, driven by strong Q3 metrics and the affordable model announcement.
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