Tesla reaffirmed its commitment to launching more affordable electric vehicles (EVs) in early 2025, according to its third-quarter earnings report.
The company reiterated that it is preparing to introduce new, lower-cost models to help accelerate the global shift to sustainable energy. The aim is to make EVs affordable for all, with the total cost of ownership per mile competitive with other forms of transportation.
This follows Tesla’s earlier decision to abandon plans for a more affordable “Model 2” but later recommit after investor backlash. Although it remains unclear if the new model will be a completely new vehicle or a lower-cost version of the Model 3, Tesla plans to begin launching these more affordable EVs in the first half of 2025.
Tesla Reports Strong Q3 Earnings
Tesla reported a 17 percent increase in net income for the third quarter of 2024, reaching $2.2 billion on $25.2 billion in revenue. This marks a 7 percent year-over-year increase in revenue compared to the same period in 2023. These earnings slightly exceeded expectations, as analysts had predicted a 9 percent decline in quarterly profit, according to FactSet. Revenue from regulatory credits remained strong, marking the company’s second-highest quarter for such credits as other original equipment manufacturers (OEMs) continue to struggle with emissions requirements.
The company’s gross margins, a focal point for investors, showed signs of stabilization after months of decline. Tesla reported:
- Gross margins of 19.8 percent, up from 18 percent in the previous quarter,
- A cost of goods sold per vehicle at a record low of $35,100, and
- Margins slightly higher than in Q3 2023.
Tesla also highlighted significant milestones in its report. The company produced its 7 millionth vehicle on October 22, 2024, and announced that the Cybertruck had become the third best-selling EV in the U.S., following the Model Y and Model 3. The Cybertruck reached positive gross margins for the first time, further contributing to the company’s improving financial outlook.
Tesla Faces Slowing Demand and Competition
Despite these achievements, Tesla continues to face challenges, including increasing competition and slowing demand for EVs. The company delivered 462,890 vehicles in the third quarter, a 6.3 percent increase from the previous quarter, but fell short of analyst expectations, raising concerns about a potential decline in annual deliveries for the first time in years.
CEO Elon Musk stated during a conference call with investors that Tesla expects vehicle growth of 20-30 percent in 2025, attributing this forecast to lower costs and advancements in autonomous technology. Musk also revealed that Tesla is testing a ride-hailing app with employees in the Bay Area and plans to launch a paid service in 2025.
Featured Image courtesy of Aditya Chinchure on Unsplash
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