Tesla shares surge on strong earnings, 30% growth forecast in 2025

By Kara Carlson and Dana Hull 

Tesla Inc.’s shares surged the most in more than three years after the carmaker reported surprisingly strong earnings and forecast as much as 30 per cent growth in vehicle sales next year. 

Third-quarter results were buoyed by Tesla turning a corner with the Cybertruck, which generated profit for the first time. Lower material costs, an expanding energy business and sales of regulatory credits to automakers that need help complying with emissions limits also contributed to Tesla’s best quarterly earnings in more than a year.

 

Chief Executive Officer Elon Musk offered an upbeat outlook for 2025, citing the rollout of more affordable models that Tesla has yet to identify. “Something like 20 per cent to 30 per cent growth next year is my best guess,” he said on a webcast.

 

 

Tesla’s shares jumped 20 per cent at 12:54 p.m. Thursday in New York, the biggest intraday gain since March 2021. The stock had fallen 14 per cent this year through the close Wednesday and slumped in the weeks since Musk unveiled self-driving taxi and van prototypes.

 

Musk’s net worth jumped by more than $30 billion Thursday, which would mark his third-biggest wealth gain of all time, according to the Bloomberg Billionaires Index. 

Musk is betting Tesla’s future on autonomy, having scrapped plans for a new vehicle that was going to be cheaper than the Model 3 sedan. By reporting an uptick in profitability and optimism about next year, the CEO assuaged concerns that Tesla’s core business will continue slipping while he prioritizes a years-long pursuit of self-driving technology.

 

“Investors who wanted something today got better-than-expected profit and guidance for growth in deliveries,” said Gene Munster, managing partner of growth-investment firm Deepwater Asset Management. “The long-term investors got the golden carrot.”

 

Government Gig 

Musk spent a brief portion of the late-Wednesday webcast discussing what he might do in a second Trump administration.

 

After calling for a federal approval process for autonomous vehicles, the Tesla CEO said he would “try to make that happen” if appointed to a government role he and Donald Trump first discussed in August. The billionaire has backed the Republican nominee by pouring $75 million into a super political action committee supporting the candidate.

 

Musk reiterated that he expects Tesla to produce a robotaxi called Cybercab in 2026 and said the company will aim to make at least 2 million units annually, without specifying by when. Tesla has yet to make that many cars across its entire lineup in a year.

 

“I think it’s at least 2 million units a year, maybe 4 million ultimately,” he said, before cautioning: “These are just my best guesses.” 

Tesla projected slight growth in vehicle deliveries this year, which will require a record showing in the fourth quarter after sales slumped in the first half.

 

The company said the Cybertruck, which started shipping late last year, achieved positive gross margin as production increased. While Tesla hasn’t said how many trucks it’s built or sold in quarterly releases, US recall documents show the company has delivered at least 27,000 pickups.

 

Tesla reported adjusted earnings of 72 cents a share, beating analysts’ average estimates for the first time in five quarters. The company’s automotive gross margin excluding regulatory credits ticked up to 17.1 per cent, also exceeding projections. 

 

Low Expectations 

Garrett Nelson, an analyst with CFRA Research, said investors had set a low bar for this quarter and questioned whether Tesla can sustain the level of profitability.

 

“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,” Nelson said in a note to clients. 

 

Tesla generated $739 million in revenue during the quarter from selling regulatory credits to car manufacturers in need of assistance complying with stricter pollution standards. This was the Austin-based automaker’s second-biggest haul, trailing only the previous quarter.

 

The company also credited its energy business as a revenue and profitability driver. Tesla has already deployed more battery storage products this year than it did in all of 2023.

 

In a regulatory filing Thursday, Tesla disclosed that it recognized $326 million in revenue during the quarter related to the features it markets as Full Self-Driving, or FSD. As the quarter came to a close, the company released FSD to some Cybertruck owners and deployed a feature that enabled customers to summon their vehicle in parking lots.

 

Tesla also raised its forecast for capital expenditures this year to over $11 billion, from more than $10 billion.

 

Ride-Hailing 

Musk expects to go public next year with a ride-hailing app that employees have been testing out in the San Francisco Bay area. The company plans to launch first in California and Texas.

 

“That would be very exciting,” the CEO said, calling it “really a profound change. Tesla becomes more than a sort of vehicle and battery manufacturing company at that point.”

 

Uber and Lyft shares declined Thursday.