Tesla Q3 2024 earnings: surge in stock amid Robotaxi unveil and market challenges

When is Tesla reporting?

​Tesla is scheduled to report its Q3 earnings on Thursday, 24 October at 7.10am (AEDT).

Key financials

Expectations for Q3

• Revenue: approximately $25.55 billion
• Earnings per share (EPS): analysts project a slight year-over-year (YoY) decline.

Comparison to previous trends

The company has been navigating a challenging landscape, characterised by narrowing profit margins and heightened competition, which have weighed on its financial outlook.

Market and operational insights

Despite these headwinds, Tesla's stock has shown a commendable recovery, surging nearly 70% since late April 2024. This upward momentum can be attributed to strong quarterly delivery figures and CEO Elon Musk's unwavering focus on autonomous driving technologies as a future revenue stream.

Investor focus for Q3 earnings

As Tesla prepares to release its Q3 earnings, investor focus will likely centre on several key areas:

• Impact of recent price cuts on profit margins
• Progress on the Robotaxi project and its potential revenue contribution
• Updates on Full-Self-Driving technology and regulatory approvals
• Effects of executive departures on company operations
• Outlook for Q4 2024 and full-year 2025 deliveries

With these dynamics at play, Tesla’s Q3 2024 earnings release is poised to offer crucial insights into how the company plans to address its near-term challenges while pursuing its ambitious vision for the future.

Tesla's Robotaxi vision: a new era in Autonomous Driving

The unveiling of Tesla's Robotaxi marks a pivotal chapter in the company's pursuit of a robust autonomous vehicle ecosystem. On 10 October 2024, Tesla showcased its groundbreaking vision for a global fleet of autonomous vehicles, introducing two novel models: the Cybercab and the Robovan.

Both vehicles are a testament to Tesla's ambitious technology roadmap. The Cybercab is a compact, self-driving coupé, while the Robovan offers larger seating capacity with room for 20 passengers. Distinctively, these models operate without traditional steering wheels or pedals, instead leveraging advanced AI and camera systems to navigate, moving away from the industry's reliance on lidar and detailed mapping software.

CEO Elon Musk emphasised the substantial profit opportunities the Robotaxi business represents, positioning it as a cornerstone of Tesla's long-term strategy. Some analysts have echoed Musk's sentiment, estimating the Robotaxi venture could contribute as much as $153 billion in revenue, significantly bolstering Tesla's earnings potential.

Tesla has set an ambitious timeline to begin production of the Cybercab by 2027, with an expected consumer price of around $30,000, aiming to make it accessible to a broad audience. This strategic pricing is seen as a competitive manoeuvre to capture market share as the global demand for autonomous vehicles accelerates.

Investor considerations

Investors are closely monitoring several aspects of the Robotaxi project:

• Manufacturing milestones: the timeline and cost-efficiency of rolling out the Cybercab and Robovan models compared to traditional vehicle production
• Market adoption: the anticipated speed of adoption by consumers and businesses alike, influenced by price point and perceived value versus cost
• Technological challenges: overcoming any technical hurdles with AI navigation and battery efficiency that could impact large-scale deployment
• Regulatory environment: the regulatory landscape globally, as Tesla expands its Robotaxi service, with a keen focus on safety standards and licensing requirements across different regions.

Tesla Smart Score and analyst rating

Tesla has a Smart Score of '7 Neutral' and is rated as a 'Hold' by analysts, with 11 'Buy', 16 'Hold', and 8 'Sell' ratings as of Friday, 11 October 2024. According to LSEG Data & Analytics, analysts provide a similar view, reflecting a mix of buy and hold positions with some strong sell recommendations.

Tesla Smart Score chart

How analysts' rate Tesla

Executive departures and leadership changes

The Robotaxi unveiling coincides with notable changes in Tesla's leadership team. Four high-ranking executives have announced their departures, prompting concerns about the potential impact on the company's strategic direction. As Tesla pivots towards a focus on autonomous driving, robotics, and AI technologies, the effect of these departures will be scrutinised for any operational disruptions.

Market challenges and future outlook

Tesla faces several challenges as it moves forward, including a pullback in consumer demand and intensified competition, particularly in Asian markets. These factors have impacted Tesla's earlier forecasts of 50% annual growth in overall deliveries. Nevertheless, Tesla is expanding its global footprint, with plans to roll out its Full-Self-Driving software in Europe and China, subject to regulatory approval.

The global Robotaxi market is estimated to generate significant revenue by 2040, with projections of reaching $1.7 trillion. However, some analysts warn that previous forecasts about the market's size may have been overly optimistic.

​Tesla share price weekly candlestick chart

• _{Source: TradingView. The figures stated are as of 10 October 2024. Past performance is not a reliable indicator of future performance. This report does not contain and is not to be taken as containing any financial product advice or financial product recommendation.}