Tesla (TSLA) Q3 2024 earnings results and conference call transcript
Published , by Asif Khan
Tesla is out with the company's Q3 2024 earnings results, and the stock is reacting to the news in after-hours trading. The EV company reported adjusted earnings-per-share (EPS) of $0.62/share and revenues of $25.18 billion. Earnings missed the EPS whisper number of $0.65/share, but did come in above analysts consensus EPS estimate of $0.58/share. Revenues also missed Wall Street analyst estimates of $25.4 billion.
Listen to the Tesla (TSLA) Q3 2024 earnings call
Tesla (TSLA) Q3 2024 Earnings Release
Check out the full TSLA Q3 2024 earnings report on the Tesla Investor Relations website.
Highlights
Profitability
$2.7B GAAP operating income in Q3
$2.2B GAAP net income in Q3
$2.5B non-GAAP net income in Q3
Cash
Operating cash flow of $6.3B in Q3
Free cash flow of $2.7B in Q3
$2.9B increase in our cash and investments in Q3 to $33.6B
Operations
Operations Increased AI training compute by over 75% in Q3
Cybertruck became the third best-selling EV in Q3 in the U.S. (behind only Model Y and Model 3)
Over two billion miles driven cumulatively on FSD (Supervised) as of Q3 with more than 50% on V12
Summary
We delivered strong results in Q3 with growth in vehicle deliveries both sequentially and year-on-year, resulting in record third-quarter volumes. We also recognized our second highest quarter of regulatory credit revenues as other OEMs are still behind on meeting emissions requirements.
Our cost of goods sold (COGS) per vehicle5 came down to its lowest level ever at ~$35,100. In order to continue accelerating the world’s transition to sustainable energy, we need to make EVs affordable for everyone, including making total cost of ownership per mile competitive with all forms of transportation. Preparations remain underway for our offering of new vehicles – including more affordable models – which we will begin launching in the first half of 2025. At our "We, Robot" event on October 10, we detailed our long-term goal of offering autonomous transport with a cost per mile below rideshare, personal car ownership and even public transit.
The Energy business achieved another strong quarter with a record gross margin. Additionally, the Megafactory in Lathrop produced 200 Megapacks in a week, and Powerwall deployments reached a record for the second quarter in a row as we continue to ramp Powerwall 3.
Despite sustained macroeconomic headwinds and others pulling back on EV investments, we remain focused on expanding our vehicle and energy product lineup, reducing costs and making critical investments in AI projects and production capacity. We believe these efforts will allow us to capitalize on the ongoing transition in the transportation and energy sectors.
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.
Outlook
Volume
Our company is currently between two major growth waves: the first one began with the global expansion of the Model 3/Y platform and we believe the next one will be initiated by advances in autonomy and introduction of new products, including those built on our next generation vehicle platform. Despite ongoing macroeconomic conditions, we expect to achieve slight growth in vehicle deliveries in 2024. Energy storage deployments are expected to more than double year-over-year in 2024.
Cash
We have sufficient liquidity to fund our product roadmap, long-term capacity expansion plans and other expenses. Furthermore, we will manage the business such that we maintain a strong balance sheet during this uncertain period.
Profit
While we continue to execute on innovations to reduce the cost of manufacturing and operations, over time, we expect our hardware-related profits to be accompanied by an acceleration of AI, software and fleet-based profits.
Product
Plans for new vehicles, including more affordable models, remain on track for start of production in the first half of 2025. These vehicles will utilize aspects of the next generation platform as well as aspects of our current platforms and will be able to be produced on the same manufacturing lines as our current vehicle line-up.
This approach will result in achieving less cost reduction than previously expected but enables us to prudently grow our vehicle volumes in a more capex efficient manner during uncertain times. This should help us fully utilize our current expected maximum capacity of close to three million vehicles, enabling more than 50% growth over 2023 production before investing in new manufacturing lines.
Our purpose-built Robotaxi product will continue to pursue a revolutionary “unboxed” manufacturing strategy
Tesla's earnings results conference call is set to kick off at 5:30 p.m. ET. Keep an eye on this article for a transcription of the earnings call right here.
Call starts at 5:32 p.m. EDT
Elon Opening Remarks recap results
Tesla has achieved record deliveries
If you look at EV companies worldwide, no other EV company is profitable, or EV division is profitable
It is notable that Tesla is profitable despite a difficult environment
produced 7 millionth vehicle yesterday
Energy storage business is growing like wildfire
On October 10, we laid out our vision of a autonomous driving future
Humanoid robots walking among people
20 Cybercabs and 30 Model Y vehicles at the We. Robot event
No incidents at the entire events
Cybercab had no steering wheel or brake pedals
no way to intervene, but went by smoothly
Elon reiterates early 2025 delivery target for new affordable Tesla vehicles
Elon estimates 20-30% vehicle growth in 2025
Cybercab reaching volume production in 2026
4680 cell is close to being the most competitive cell
If we execute well, the 4680 will be the most cost competitive cell in North America
We will continue to buy cells from a lot of our competitors
We are obviously substantially increasing our vehicle and stationary storage output
Most of the cells will come from suppliers
Good news that the Tesla internal cell is tracking to be most competitive
With respects to autonomy, week to week improvements in the miles/intervention
FSD 12.5 release in Cybertruck combines code into a single stack for highway and street driving
Release of Actually Smart Summon (ASS), we try to have a sense of humor at Tesla
Version 13 of FSD is coming soonish
Improving miles/intervention is a key focus
Both Elon and the CFO are hyping the v13 improvements
Elon is muttering about stuff...
Model 3 and Model Y look fairly normal... Cybertruck and Cybercab don't
We want to exposure autonomy to more people
Every time we have a significant update to FSD, we will open up to a one month trial
No need to wait for Robotaxi or Cybercab to experience FSD
Tesla employees in the Bay Area are using the rideshare app with a safety driver
Should be rolling out in Texas and maybe California
Tesla becomes more than a vehicle and battery manufacturing company at the point that FSD truly ships
1 crash/700k miles for Supervised FSD right now
We are currently not training compute constrained
With Optimus, we showed a massive improvement at the We, Robot event
Much better at tactile sensing
Feel confident saying we have the most advanced humanoid robot
All the ingredients to be able to scale for humanoid robot production
Tesla has the AI and production capabilities to build Optimus at scale
I think Optimus will ultimately be the most valuable product ever made
Storage is doing well, production of pack factories is still ramping
It won't be long before we are shipping 100 GWh per year at Tesla
Will ultimately grow to over multiple terrawatts/hr per year over time
Elon might have Grok assess his latest Tesla master plan
Elon is rambling about human civilization
"we've got a long way to go"
Tesla will become the most valuable company in the world
Probably by a long shot
Thanks Tesla team
Opening Statement comes to its merciful end
CFO is here to read the press release to us
CFO mentions that it is a challenging economic environment
Elon chimes in saying that a decline in interest rates will increase automotive demand
Interest rates have kept consumers from buying cars according to CFO
Energy deployments fluctuate based on customer schedules
Expect energy storage to sequentially grow in Q4 2024
Deployments will cause a fluctuation in margins as packs get delivered
On Automotive margins, one other thing that I want to share is that we will continue to keep whatever we can while squeezing out costs
We are capable of lowering costs
Decreasing COGS of the vehicle is something they claim they are good at doing
We have started using the GPU cluster in Texas during the quarter
Being very judicious on our AI compute spend
future is incredily bright
Say questions begin
Focus on lowering costs of Model Y and 3 right now
Cybercab will be a sub $30k car with tax credits, says Elon
Elon says that there will not be a $25k EV without FSD
Everything is going to be electric/autonomous
Should be blindingly obvious that this is the future
We've been shouting this from the rooftops for years
All (most) vehicles we have made are capable of autonomy
We make 35k cars a week, Waymo only has a thousand
Having a regular $25k vehicle without FSD would not make sense
Cost per mile is what matters
Cybercab is not going to have a steering wheel or pedals
The company has expanded existing service centers and bolstered mobile tech hiring
We make the cars and we services the cars, compared to the traditional OEM model where the dealers make money from service
We are incented to reduce the servicing cost
Fundamental technology advantage for Tesla when compared to compeitiors in the auto industry
Investor question on Tesla Semi
Progressing on Tesla Semi factory in Reno
On track to start pilot builds in 2025, with volume in 2026
Elon: I don't think we are going to be demand limited
We've ridiculous demand for the Semi
Fundamentally, the cost per mile for a Tesla Semi is better than a diesel track
Pepsi actually said last week that truck drivers don't want to go back to diesel
It's fun and easy to drive
and it hauls ass
"maybe too fast"
The couple hundred we have shipped have the hardware required to deploy FSD
It will be a massive improvement for driver safety and fatigue
When will Tesla corporate X and Grok?
Elon: "We'll keep adding stuff to do in the car"
Making the screen have more robust options while in an autonomous vehicle
It's why Cybercab has a great big screen and sound system
personal movie theater
There are some really fun games in the car - Elon
We are constantly looking at new features consumers are requesting
Elon mentioned unsupervised FSD in Texas and Cali at the Robotaxi event, how are the regulatory approvals going?
I would be shocked if we don't get approval next year - Elon
There should be a federal approval process for FSD tech
What is the plan for 2025?
Elon says we talked about this already
Cheaper models
Factory ramps
It's harder to get 20% of the cost out of the car than it is to build the factory and source the parts in the first place
Elon wants people to make a movie about cost cutting...
Heroism in getting costs out of things
Game of Thrones, but pennies
"There's no other car company that is even trying what we are doing." - Elon Musk
Touting the machine that builds the machine... again
CFO says there is a lot going on leading into 2025
Elon Musk - Tesla is winning on everything we are doing
There are multiple companies within the company
What is going on with the Tesla Roadster?
Elon Musk calls us "long-sufferring reservation holders"
Things like the Roadster are kinda like dessert
We are working on it
it has to come behind that things that help society more
We are close to finalizing the design on that...
Peter Thiel and Elon are really good friends... barf
How Robotaxi will roll out?
CFO rambles about nothing
Elon - We are not 100% sure
Hardware 4 is easier to work with
Takes a lot of effort to squeeze that functionality into hardware 3
There is some chance that hardware 3 cars won't meet a safety threshold
We have designed the FSD system to be upgradeable
The cameras are capable
We don't actually know the answer to that. - Elon
analyst questions
New Street asks about AI compute ramp, and why you don't feel you are compute constrained? Creating larger models? How are you using your compute? Followup about FSD rollout in TX and CA?
Elon - the nature of real world AI is different from an LLM. 7-9 cameras that create gigabytes of context that are distilled down to a set of control outputs
You have to then process that in the car with a very small amount of compute power
It's all doable and its happening, but its a different problem than what Gemini or OpenAI is doing
The inference computer is quite small because we spent a lot of effort on training
The more you train on something, the less mental workload it takes when you do it
we can make up for the size of the inference computer with heavy training
Then there's also petabytes of data coming in, and having to sift to what is most important for training
as I said, we are not currently training compute constrained
simulation is another way to improve training - CFO
Regarding FSD rollout, states have safety regulations and thresholds that Tesla will adhere to
We think we will be able to have driverless Teslas doing paid rides next year in TX and CA
Adam Jonas from Morgan Stanley asks "relationship between Tesla and xAI." Are your two companies competing against each other for your time Elon?
xAI has been helpful to Tesla AI quite a few times
Like with scaling up training, installing equpment
Helping to navigate node failures
xAI is working on AGI, Tesla is trying to make autonomous cars and robots
They're different problems
AI is a broad spectrum - CFO
We are solving different issues for the most part - CFO
Tesla is focused on real world AI, it's quite different than an LLM
Tesla is the most efficient on inference compute by necessity
Well-designed Tesla AI chip, but there are different problems
xAI is because I felt there wasn't a truth-seeking digital super intelligence company - Elon
xAI has been helpful and will continue to be helpful to Tesla
What other car company has a world-class chip design and AI team? - Elon
Call comes to an end, giving only two Wall Street analysts time for a question
Call ends at 6:38 p.m. EDT
This article is only meant for educational purposes, and should not be taken as investment advice. Please consider your own investment time horizon, risk tolerance, and consult with a financial advisor before acting on this information.
Full Disclosure:
At the time of this article, Shacknews primary shareholder Asif A. Khan, his family members, or his company Virtue LLC had the following positions: