Electric vehicle giant Tesla reported robust third-quarter results, highlighted by record-breaking vehicle deliveries and substantial year-over-year growth in revenue and profitability. The company attributed its strong performance to rising demand for EVs, lower production costs, and an expanding energy product lineup.
Vehicle Delivery Growth & Regulatory Credits Bolster Revenue
Tesla achieved record Q3 vehicle delivery volumes, both sequentially and year-on-year, alongside its second-highest quarter for regulatory credit revenues, underscoring continued challenges faced by other automakers in meeting emissions standards. The company’s cost of goods sold (COGS) per vehicle reached a historic low of around $35,100, reinforcing Tesla’s commitment to making electric vehicles (EVs) more affordable. New vehicle models, including lower-priced EVs, are expected to debut in early 2025, with the long-term goal of offering autonomous transportation at a cost per mile below traditional car ownership, ridesharing, and even public transit.
Financial Performance: Revenue, Profit, and Cash Position
Total revenue grew 8% year-over-year, reaching $25.2 billion in Q3. This growth was driven by increased vehicle deliveries, enhanced Energy Generation and Storage revenues, and higher income from Full Self-Driving (FSD) feature releases on models like the Cybertruck. Regulatory credits also contributed to the revenue uptick. However, reduced average selling prices (ASP) for Tesla’s S3XY vehicle lineup, partly due to pricing adjustments and financing incentives, tempered ASP growth.
Operating income for Q3 rose to $2.7 billion, translating to a 10.8% operating margin. This margin improvement reflects reduced costs per vehicle, particularly in raw materials and logistics, higher Energy Generation and Storage profit, and cost-reduction initiatives. Cash, cash equivalents, and investments at quarter’s end totaled $33.6 billion, marking a sequential increase of $2.9 billion due to a strong free cash flow of $2.7 billion.
Energy Business Hits Record Margins Amid Growing Product Lineup
Tesla’s Energy business also achieved a record quarter in gross margin, supported by enhanced production at the Megafactory in Lathrop, which rolled out 200 Megapacks in one week. Powerwall installations reached new heights for the second consecutive quarter, boosted by the ongoing Powerwall 3 ramp-up.
Despite economic challenges and reduced investments in EVs from some competitors, Tesla remains focused on expanding its vehicle and energy offerings, reducing production costs, and accelerating AI-driven projects to support its growing production capabilities. The company remains confident that these investments will position it for success as the global transportation and energy sectors shift towards sustainable solutions.
