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Musk in Tesla Q3 Earnings Call: All New EVs to Be Autonomous

In Tesla’s Q3 earnings call, Elon Musk celebrated record deliveries, sharp cost reductions, progress on 4680 cell production—and left politics out of it.

Michael C. Anderson, Editor-in-Chief, Battery Technology

October 24, 2024

5 Min Read
At its Fremont factory, Tesla celebrates production of its 70millionth vehicle.
At its Fremont factory, Tesla celebrates production of its 70millionth vehicle.Tesla

Tesla's third-quarter earnings made investors feel optimistic (as evidence by an after-hours stock price jump), with CEO Elon Musk discussing record deliveries, growing energy storage business, and progress in cost reduction efforts. These developments, alongside updates on 4680 battery production, argued for Tesla as making strides to maintain its competitive edge in an evolving market.

Tesla's profitability stands out in a challenging EV market

Tesla CEO Elon Musk reassured investors during the earnings call that the company’s profitability is notable, especially in a tough automotive environment.  Musk emphasized that no other electric vehicle (EV) company or division of traditional automakers has reached profitability, making Tesla’s performance stand out. This quarter, Tesla delivered its 7-millionth vehicle and achieved record Q3 deliveries.

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While Musk projected a 20% to 30% increase in vehicle sales next year, CNN notes that this quarter’s earnings boost primarily came from successful cost-cutting measures. The company reduced the cost to build a vehicle to its lowest level ever—$35,100, down 6% year-over-year. The focus on production efficiency and lower costs helped Tesla outperform Wall Street’s earnings expectations, reporting 72 cents per share, compared to analysts’ 58-cent estimate.

Related:Tesla: EV Profits Down; Energy-Storage Profits Up; Cybertruck Coming

Energy storage soars and regulatory credits boost profits

Tesla's energy storage segment saw significant growth, with demand for products like Megapack and Powerwall increasing rapidly. Musk stated that Tesla's energy storage business is "growing like wildfire," and that revenue from energy generation and storage grew by 52%, contributing $2.38 billion in revenue this quarter.

Regulatory credits also provided a considerable profit boost, as Tesla earned $739 million from selling these credits to automakers that are falling short of environmental targets. These credits contributed to Tesla’s automotive revenue of $20 billion, a slight 2% increase from a year earlier.

4680 battery cells close to cost competitiveness

A key point of interest for Tesla’s battery production was Musk's update on the progress of the 4680 battery cell, a major development for the company’s future EVs.

According to Musk, Tesla’s 4680 battery cells are "rapidly approaching the point where [they are] the most competitive" when factoring in the full landed cost in the U.S. As he shared with analysts on the earnings call, the 4680 cell is expected to be Tesla’s most cost-competitive option once production scales further, making it a critical component in maintaining the company's competitive edge in battery technology.

Related:Tesla’s Q2 Earnings Call: Key Battery Industry Takeaways

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Autonomy as the future: No non-robotaxi $25,000 car

In response to investor questions about when Tesla would produce a $25,000 non-robotaxi car, Musk made it clear that the company is focused entirely on autonomous electric vehicles. According to the Seeking Alpha transcript, Musk likened non-autonomous gas cars in the future to "riding a horse," describing them as a niche product. "Having a regular $25,000 model is pointless," he explained, stressing that the company’s efforts are instead focused on optimizing for autonomy, with the Cybercab being one of the products that will cost roughly $25,000.

On the challenges of lowering production costs, Musk shared how difficult it is to reduce costs for Tesla's vehicles, likening the effort to "Game of Thrones but pennies." Despite these challenges, Tesla has successfully deleted a significant number of parts from its vehicles, which has helped bring down costs, he said.

Looking ahead, Tesla expects to launch more affordable models in the first half of 2025, while the Cybertruck, despite facing several recalls, has already turned a profit. Musk also outlined the company's vision for autonomous ride-hailing services, with plans to begin offering driverless rides in Texas and California by 2025.

Silence on investor questions regarding Musk’s political activities

As we reported earlier this week, Elon Musk made multiple headlines for his spending and speaking in support of Donald Trump’s candidacy, in particular, his $1 million-a-day giveaway to registered voters and his repeating of Dominion voting machine conspiracy theories.

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As CNBC pointed out, “a significant number of shareholders wanted to know how Musk’s pro-Trump activism stands to impact Tesla and its stock price.” Shareholder questions were posted to the online platform Say Technologies; Tesla Head of Investor Relations Travis Axelrod chose from the hundreds of questions posted there to pose during the earnings call.

Examples of popular, up-voted questions regarding Musk’s recent behavior posed at Say include:

“Musk's public support 4 polarizing politicians led 2 a negative perception of Tesla's brand & division among consumers & investors. Does the board plan to ensure his political engagement doesn't detract from Tesla's core mission and protects shareholder value and brand integrity?”

“Elon Musk has the right to express his political views, but his public activism seems at odds with his responsibility as CEO to protect shareholder value. How does Tesla address this, and can it confirm Musk's actions are not harming sales or growth?”

“Elon Musk's public political stance risks alienating potential Tesla customers & a negative impact on sales. The CEO has a fiduciary duty to act in Tesla's best interest. Does the board see a conflict between Mr. Musk's personal political activities & his duty as CEO?”

The upvoted shareholder questioners here represent hundreds of thousands of Tesla shares, according to Say.

None of these questions were addressed in the earnings call, however.

About the Author

Michael C. Anderson

Editor-in-Chief, Battery Technology, Informa Markets - Engineering

Battery Technology Editor-in-Chief Michael C. Anderson has been covering manufacturing and transportation technology developments for more than a quarter-century, with editor roles at Manufacturing Engineering, Cutting Tool Engineering, Automotive Design & Production, and Smart Manufacturing. Before all of that, he taught English and literature at colleges in Japan and Michigan.

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