We’ve heard Tesla and CEO Elon Musk make outlandish claims before. To those, we’ve all taken the habit of taking them with a grain of salt. But Tesla also has a reputation for delivering. Delivering late, but still delivering.
After several questions were asked by shareholders on Tesla’s Say platform about more affordable products, it seems the cheap electric vehicle (EV) topic was finally addressed more seriously in yesterday’s earnings call. After reporting a 17 percent increase in net income for Q3, Tesla promised that vehicle deliveries would rise 30 percent next year. The carmaker said that production of more affordable models remains on track for a start of production in the first half of 2025.
Elon Musk Says No EV Company Is Profitable
In an attempt to alleviate shareholder expectations during the call, Mr. Musk reminded everyone that, to the best of his knowledge, no EV division of any company, of any existing auto company, is currently profitable. He underlined the fact that Tesla remains profitable in what he called “a very challenging automotive environment”.
This all came with a wave of good news for investors as Tesla reported a third-quarter net income of $2.2 billion. Total Q3 revenue rose 8 percent to $25.2 billion. Automotive revenue rose 2 percent to $20 billion, energy revenue rose 52 percent to $2.4 billion, and services revenue rose 29 percent to $2.8 billion.
But the brightest news came from vehicle sales, which had declined 2.3 percent over the first three quarters of 2024. During Q3, sales rose 6.4 percent to 462,890. According to Musk, this was mostly due to global sales incentives and the launch of the controversial Cybertruck. This should allow the EV giant to sell just over 1.8 million vehicles this year, which is only a slight improvement over 2023.
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 – Tesla.
Tesla’s Affordable Models Could Be Watered Down Versions Of Model 3 And Y
About these so-called affordable models. Musk didn’t go into specifics, but he did say that one of the new models could sell for under $30,000 with federal incentives. Some Wall Street analysts expect these models to be stripped down versions of the Model 3 and Model Y.
When asked about the possibility of a new model altogether – such as the rumored, smaller Model 2 – Musk simply reminded everyone that the Cybercab Robotaxi would go on sale in 2026 at under $30,000, but without a steering wheel and pedals. As I write this, Tesla’s most affordable model remains the Model 3, which underwent a thorough refresh for the 2024 model year. It currently starts at $42,490 before incentives.
TopSpeed’s Take
It’s still hard to predict what Tesla will release next, but I have a feeling we won’t be seeing another model in its portfolio until Cybercab production begins. Since the Model 3 was recently updated, and the Model Y is about to also get a facelift (under the Juniper code name), it would make more sense for Tesla to simply add a cheaper trim level to those models.
Tesla is a master of the art of economies of scale, allowing it to drive down production costs and, in turn, sell cars at a more attainable price point while still making a profit. If a sub $30,000 Model 3 is indeed underway, it could cause a lot of pressure on legacy carmakers that are still struggling to break even on their electric models.
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