(News Bulletin 247) – The electric car manufacturer generated a gross margin and profit above expectations in the third quarter. Elon Musk has also announced that he expects automobile sales to increase by 20% to 30% next year.

Tesla is suffering this year on the stock market. Fierce competition from Chinese manufacturers, several disappointments in its results and even a disappointing “robotaxis” day in October have led the shares of the group led by Elon Musk to lose 14% since January 1.

However, does the third quarter publication mark a turning point? In any case, the stock jumped 12% following this announcement in post-market trading on Wall Street.

The car manufacturer achieved profitability significantly higher than expectations while providing reassuring and even optimistic outlooks for the future.

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Margins are starting to rise again

Over the quarter from July to the end of September, the electric vehicle specialist generated revenues of $25.18 billion, up 8% year-on-year and slightly below expectations, coming in at $25.37 billion according to a LSEG consensus cited by CNBC. But earnings per share came in at 72 cents, versus 58 cents expected, up 9%.

Revenues in the automotive division increased 2%, while revenues in the energy management and storage business jumped 52%.

Tesla also benefited from significant revenues from carbon credits. In essence marketing cars with low CO2 emissions, Tesla can sell these credits to other manufacturers who are struggling to comply with the regulatory limits on emissions imposed by certain American states. These revenues reached $739 million, the second highest quarterly figure in Tesla’s history.

It is especially in terms of profitability that Tesla has overtaken the market. The operating margin increased from 7.6% to 10.8% year-on-year. Above all, the automobile gross margin excluding carbon credits, an indicator keenly monitored by Wall Street, stood at 17.1% compared to 15.1% expected by analysts.

“This is a clear indication that Musk and others continue to focus on profitability while balancing their plans for the future. With price cuts now in the rearview mirror, we view this as a key play for “To illustrate Tesla’s ability to grow margins as the company continues its transformation toward artificial intelligence and autonomous vehicles in the years to come,” said Dan Ives of Wedbush.

Ambitious Elon Musk

Tesla has notably tightened costs to improve its profitability. The company said the cost of goods sold (labor and material costs) per vehicle fell to $35,100, an all-time low for the company.

“To my knowledge, no electric vehicle division of a company is profitable. It is therefore remarkable that Tesla is profitable in a very complicated macroeconomic environment for the automobile” proclaimed Elon Musk, during a conference call with the analysts.

In terms of outlook, Tesla said it expects to see “slight growth” in deliveries this year. This would require growth of around 10% for the fourth quarter alone, calculates X Gene Munster, managing partner of Deepwater Asset Management, while the consensus was only counting on 0.5% for this period.

Above all, for 2025, Elon Musk surprised analysts by announcing ambitious figures. “I give you a rough estimate with growth (in automobile sales, editor’s note) of 20% to 30%,” he declared.

This growth should be driven by the launches, next year, of new vehicles, including “more affordable” models, in the first half.

“Investors who wanted something today got a better-than-expected profit and delivery growth expectations,” concluded Gene Munster.