by the numbers

Tesla posts surprise $2.17B third-quarter profit, up from a year ago

The strong performance changed the trajectory of the year for the Austin, Texas-based company, which had seen sales and profits decline in the first two quarters. Photo courtesy of Tesla

Tesla’s third-quarter net income rose 17.3 percent compared with a year ago on stronger electric vehicle sales, and an optimistic CEO Elon Musk predicted 20 percent to 30 percent sales growth next year.

The strong performance changed the trajectory of the year for the Austin, Texas-based company, which had seen sales and profits decline in the first two quarters.

In its letter to investors, Tesla predicted slight growth in vehicle deliveries this year, better than the 1.8 million delivered worldwide in 2023.

Tesla said Wednesday that it made $2.17 billion from July through September, more than the $1.85 billion profit it posted in the same period of 2023.

The earnings came despite price cuts and low-interest financing that helped boost sales of the company’s aging vehicle lineup during the quarter. It was Tesla’s first year-over-year quarterly profit increase of 2024, a year plagued by falling sales and prices.

Revenue in the quarter rose 7.8 percent to $25.18 billion, falling short of Wall Street analysts who estimated it at $25.47 billion, according to FactSet. Tesla made an adjusted 72 cents per share, soundly beating analyst expectations of 59 cents.

Shares in Tesla Inc. soared nearly 12 percent in trading after Wednesday’s closing bell.

On a conference call with analysts, Musk said the profit increase came despite a challenging environment for auto sales with still-high loan interest rates. “I think if you look at EV companies worldwide, to the best of my knowledge, no EV company is even profitable,” he said.

Musk qualified his prediction that Tesla would post 2025 vehicle sales growth of 20 percent to 30 percent by saying it could be changed by “negative external events.”

Earlier this month Tesla said it sold 462,890 vehicles from July through September, up 6.4 percent from a year ago. The sales numbers were better than analysts had expected.

The letter said that Tesla is on track to start production of new vehicles, including more affordable models, in the first half of next year, something investors had been looking for. The new vehicles will use parts from its current models and will be made on the same assembly lines as Tesla’s current model lineup, the letter said.

The new vehicles were not identified and the price was nebulous. Musk has said in the past the company is working on a car that will cost about $25,000, but said Wednesday that a new affordable vehicle would cost under $30,000 including government tax incentives.

Earlier this month, the company showed off a purpose-built two-seat robotaxi called “Cybercab” at a glitzy event at a Hollywood movie studio. Musk said it would be in production before 2027 and cost around $25,000.

By using parts from existing models and the current manufacturing system, Tesla won’t reach cost reductions that it previously expected using a new manufacturing setup.

Tesla said it reduced the cost of goods per vehicle to its lowest level yet, about $35,100.

The company’s widely watched gross profit margin, the percentage of revenue it gets to keep after expenses, rose to 19.8 percent, the highest in a year, but still smaller than the peak of 29.1 percent in the first quarter of 2022.

During the quarter, Tesla’s revenue from regulatory credits purchased by other automakers who can’t meet government emissions targets hit $739 million, the second highest quarter in company history.

Musk said Tesla's “Full Self-Driving” system is improving and would drive more safely than humans in the second quarter of next year. Despite the name, Teslas using “Full Self-Driving” cannot drive themselves, and human drivers must be ready to intervene at all times.

The company, he said, is offering an autonomous ride-hailing service to employees in the San Francisco Bay Area, but it currently has human safety drivers. It expects to start a robotaxi service for the public in California and Texas next year, he said.

Musk also conceded that it may not be possible to reach autonomous driving safety levels with older editions of “Full Self-Driving” hardware. If it can't do that, Tesla will upgrade computers in the older cars for free, he said.

The self-driving claims come just five days after U.S. safety regulators opened an investigation into the system's cameras to see in low-visibility conditions such as sun glare, fog and airborne dust. The probe raised doubts about whether the system will be ready to drive on its own next year.

The National Highway Traffic Safety Administration said in documents posted Friday that it opened the probe of 2.4 million Teslas after the company reported four crashes in low visibility conditions. In one, a woman who stopped to help after a crash on an Arizona freeway was struck and killed by a Tesla.

Investigators will look into the ability of “Full Self-Driving” to “detect and respond appropriately to reduced roadway visibility conditions."

Edward Jones analyst Jeff Windau said the earnings report and conference call showed that Tesla is making money on software, a business with high profit margins.

Still, he has a “hold” rating on the stock as the company moves toward robotics and autonomous vehicles. “They’ve got a lot of challenging goals out there,” he said.

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A View From HETI

Merab Momen, founder of AI CTO Services. Courtesy Photo

Artificial intelligence is now everywhere. It is mentioned in every startup pitch deck, and every corporate roadmap claims to use it. However, many early-stage businesses struggle with the simple question, “What does AI actually mean for my business?”

In a recent podcast episode of EnergyTech Startups, Merab Momen, founder of AI CTO Services and a long time AI practitioner, explains why most founders misunderstand AI, how startups can practically apply it and why Houston is quietly becoming a serious hub for AI-driven innovation.

Filling the AI Leadership Gap

Merab’s career has spanned decades of technology transitions. He worked on neutral networks in the 1990s, constructed computer vision systems long before they were common, and helped install AI solutions inside huge industrial companies. However, he noticed a huge problem when generative AI started to explode into the mainstream-The requirement of a real partner by the founders for AI integration but inability to rely on a full-time CTO and project-based consultants.

“I really needed something which is much more engaging where I can give that partner-level advice to the founders,” he said. By giving firms on-demand access to high-level AI knowledge and expertise, his methodology enables them to analyse tools, steer clear of cost blunders and eventually transition to a permanent technology leader when the time is right.

AI is Older than Most People Think

Despite its recent rise in popularity, AI is nothing new. AI actually began in the 1950s. Merab in his conversation explained how he worked on his first AI project back in the year 1996 that worked perfectly, but the processing power wasn’t just there to make it practical. He continued how he utilized the swarm intelligence models to optimize supply chains, now referred to as MLPOs and data engineering.

From Language Models to Physical World

Much of the public conversation about AI revolves around chatbots and text generation. But Merab sees far greater potential in AI’s interaction with the physical world, especially in industrial settings. He emphasized edge computing and vision language models (VLMs) as significant advances in manufacturing and energy. This physical shift is opening doors for new opportunities for robotics, automated inspections, and industrial safety applications. Merab added that Houston is uniquely positioned for this transition.

Why Houston has an AI Advantage

Silicon Valley may dominate the AI headlines, but Merab believes Houston’s advantage lies beneath the surface. The city doesn’t lag in AI utilization; it just operates in industries where results show differently.

Machine learning isn’t new to Houston’s core industries. Energy companies, manufacturers, logistics providers, and healthcare systems have been using advanced analytics for decades. The difference lies in them innovating in industrial sectors rather than consumer technology.

What’s Next

With the AI CTO Services growing, Merab is working with startups across industries to deploy AI in practical, business-first ways.

He is more interested in assisting founders in finding answers to critical issues than following new trends.

For Houston’s energy and climate tech community, it needs to transform AI enthusiasm into real-world impact.

Listen to the full conversation with Mehrab Momin on the Energy Tech Startups Podcast to learn more.

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Energy Tech Startups Podcast is hosted by Jason Ethier and Nada Ahmed. It delves into Houston's pivotal role in the energy transition, spotlighting entrepreneurs and industry leaders shaping a low-carbon future.


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