Tesla is out with the company’s Q3 2024 earnings release. Check out all of the details and the call transcript here.
Key points
Profit margin
- Operating income in Q3 was $2.7 billion under GAAP.
- Net income in Q3 reached $2.2 billion on a GAAP basis.
- $2.5 billion of non-GAAP net profit was earned in the third quarter.
- Money in the form of coins or banknotes.
- Cash flow from operations reached $6.3 billion in the third quarter.
- Q3 saw a free cash flow of $2.7 billion.
- There was a $2.9 billion rise in our cash and investments during Q3, bringing the total to $33.6 billion.
- Management of activities
- Operations in Q3 resulted in a growth of over 75% in AI training compute.
- In Q3 in the U.S., Cybertruck ranked as the third highest-selling EV, trailing only Model Y and Model 3.
- More than 50% of the over two billion miles driven on FSD (Supervised) as of Q3 were on V12.
Brief overview
We achieved impressive outcomes in Q3 with an increase in vehicle deliveries compared to previous quarters and the same period last year, leading to all-time high third-quarter volumes. We acknowledged our second-highest quarter of revenue from regulatory credits, as other OEMs are not yet compliant with emissions standards.
The cost of goods sold (COGS) for each vehicle decreased to a record low of around $35,100. To further speed up the global shift to sustainable energy, it’s crucial to ensure electric vehicles are within reach for all by reducing total ownership costs to match other means of transportation per mile. Preparations are still in progress for our introduction of new vehicles, including more budget-friendly models, scheduled to start in the first half of 2025. During our “We, Robot” event on October 10th, we discussed our ultimate aim of providing self-driving transportation at a lower cost per mile than rideshare services, private car ownership, and even public transportation.
The Energy sector had a successful quarter, showcasing a new high gross margin. Furthermore, the Lathrop Megafactory manufactured 200 Megapacks in one week, and Powerwall installations achieved a new high for the second consecutive quarter as we scale up production of Powerwall 3.
Even though there are ongoing macroeconomic challenges and other investors are reducing their investments in electric vehicles, we are still committed to our focus on EV investments.
Revenue
Total revenue increased 8% YoY in Q3 to $25.2B. YoY, revenue was impacted by the following items:
- Growth in vehicle deliveries (+)
- Growth in Energy Generation and Storage and Services and Other (+)
- Higher FSD revenue recognition YoY for releases related to Cybertruck and certain features such as Actually Smart Summon (+)
- Higher regulatory credit revenue (+)
- Reduced S3XY vehicle average selling price (ASP) (excluding FX impact), due to mix, pricing, and attractive financing options
Profitability
Our operating income increased YoY to $2.7B in Q3, resulting in a 10.8% operating margin. YoY, operating income was primarily
impacted by the following items:
- Lower cost per vehicle, including lower raw material costs, freight and duties and other one-time charges (+)
- Growth in Energy Generation and Storage and Services and Other gross profit (+)
- Higher FSD revenue recognition YoY for releases related to Cybertruck and certain features such as Actually Smart Summon (+)
- Growth in vehicle deliveries (+)
- Higher regulatory credit revenue (+)
- Decrease in operating expenses including cost-reduction efforts (+)
- Reduced S3XY vehicle ASP (-)
Cash
Quarter-end cash, cash equivalents and investments in Q3 was $33.6B. The sequential increase of $2.9B was primarily the result of positive free cash flow of $2.7B.
Our company is currently in a transitional phase between two significant periods of growth: the first one started with the worldwide expansion of the Model 3/Y platform and we anticipate that the next one will be triggered by advancements in autonomy and the launch of new products, some of which will be based on our upcoming vehicle platform. In spite of the current macroeconomic situation, we anticipate a small increase in vehicle sales in 2024. There is an anticipation that energy storage installations will increase by over two times in 2024 compared to the previous year.
Money in the form of coins or banknotes.
We have enough cash flow to support our product roadmap, long-term capacity growth strategies, and other financial needs. In addition, we will ensure the company’s financial health by keeping a robust balance sheet amidst the uncertainty of this period.
Earnings
As we keep implementing new ideas to lower manufacturing and operations expenses, we anticipate seeing our profits from hardware being combined with increased profits from AI, software, and fleet services.
Item offered for sale or exchange
Plans for upcoming vehicles, including cheaper options, are still set to begin production in the first half of 2025 as scheduled. These vehicles will incorporate features from both the new generation platform and our current platforms, and can be manufactured on the same production lines as our current vehicles.
This strategy will lead to a decrease in cost savings compared to what was anticipated before, but it allows us to increase our vehicle production in a more financially efficient way during times of uncertainty. This will allow us to make the most of our expected maximum capacity of nearly three million vehicles, achieving over 50% growth in production from 2023 without the need for new manufacturing lines.
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