A Tesla Cybertruck at the Dubai Police stand at Gitex Global in Dubai. Pawan Singh / The National
A Tesla Cybertruck at the Dubai Police stand at Gitex Global in Dubai. Pawan Singh / The National
A Tesla Cybertruck at the Dubai Police stand at Gitex Global in Dubai. Pawan Singh / The National
A Tesla Cybertruck at the Dubai Police stand at Gitex Global in Dubai. Pawan Singh / The National

Tesla stock price rises 12% on plans to launch cheaper vehicles and ride-hailing app


Alkesh Sharma
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Tesla's stock surged more than 12 per cent in after-hours trading on Wednesday, despite reporting earnings that missed analysts' estimates, as the company confirmed plans to begin producing cheaper models by mid-2025.

The company also announced it is testing a ride-hailing service in the Bay Area, San Francisco, expected to begin operations next year.

The Texas-based electric vehicle maker, which is struggling with weak sales and rising competition in the Chinese market, said the new models will be produced on the same factory lines as its current line-up.

This approach, according to Tesla, will allow the company to increase vehicle volumes in a more spending-efficient manner during uncertain times.

“This should help us fully utilise our current expected maximum capacity of close to three million vehicles, enabling more than 50 per cent growth over 2023 production before investing in new manufacturing lines,” the company said.

Tesla did not announce the names of the new models or the expected price range. It had announced its plan to introduce cheaper vehicles to attract more customers in April this year.

The company’s chief executive and co-founder Elon Musk said that his “best guess” is that vehicle growth will reach between 20 per cent and 30 per cent in 2025, boosted by “lower-cost vehicles” and the “advent of autonomy”.

Tesla co-founder and chief executive Elon Musk. Getty
Tesla co-founder and chief executive Elon Musk. Getty

He said the company has also developed an in-house ride-hailing app that some employees have been able to use in California this year.

“You can request [an autonomous] ride and it will take you anywhere in the Bay Area … we do have a safety driver for now,” Mr Musk said during the earnings call.

He said the company is expected to introduce the service to the public next year in California and Texas.

Tesla plans to reduce costs to make EVs cheaper

Tesla said the cost of goods sold per vehicle came down to its lowest ever at nearly $35,100, a figure derived by dividing its car sales revenue by the number of new vehicle deliveries in the quarter.

To continue accelerating the world’s transition to sustainable energy, Tesla said it needs to “make EVs affordable for everyone, including making total cost of ownership per mile competitive with all forms of transportation”.

“It's great to see Tesla getting down to business when it really matters,” Thomas Monteiro, senior analyst at Investing.com, told The National.

“The improving numbers across the board signal the company may have finally found a nice, sweet spot for the pricing versus production costs equation, which has been the main issue for stock performance since last year.”

Tesla's stock is one of the worst performers in the S&P 500 index, which has jumped nearly 22.3 per cent since the start of the year.

Its shares closed almost 2 per cent down at $213.65 on Wednesday, giving the company a market value of $669.47 billion.

But after the earnings announcement and disclosure of new plans, the stock jumped 12.1 per cent in after-market hours to trade at $239.50

The company's shares have dropped nearly 14 per cent since the start of the year. In April, the car maker announced plans to cut its workforce by more than 10 per cent.

Mr Musk said the move would help the company to become “lean, innovative and hungry for the next growth phase cycle”.

Tesla missing analysts’ expectations

Tesla reported a 17 per cent yearly jump in third-quarter net profit to nearly $2.2 billion. It was 46.6 per cent up on a quarterly basis.

Revenue during the July-September period increased 8 per cent to nearly $25.2 billion, missing analysts’ expectations of $25.3 billion. It was the ninth straight quarter the company reported $20 billion or more in sales.

Earnings per share grew 17 per cent to 62 cents exceeding expectations of 42 cents based on a survey of analysts by LSEG.

Tesla's profit margins were driven by $739 million in automotive regulatory credits revenue during the quarter.

Automotive regulatory credits are government-issued incentives that Tesla earns by exceeding emissions standards, which it can sell to other car makers that fall short of meeting the regulatory standards. This allows those companies to avoid fines for non-compliance.

“The market got the message it needed to hear … Tesla's margins are improving right when they needed to – that is, ahead of a better interest environment globally. This means the company may have more firepower to get the innovation it desperately needs both on the production and product sides faster and better than the competition,” Mr Monteiro said.

The company’s automotive revenue surged 2 per cent to $20 billion, while energy generation and storage revenue expanded 52 per cent to nearly $2.4 billion in the last quarter.

Tesla said its operating income increased by 54 per cent yearly to more than $2.7 billion in the last quarter, while operating expenses decreased 6 per cent to nearly $2.3 billion.

Earlier this month, at the company's long-anticipated robotaxi event, Mr Musk displayed the new Cybercab autonomous concept vehicle. He said production will start in 2026 and the vehicles will be available for customers to buy for less than $30,000. They will cost 20 cents a mile to operate, he said.

In a shareholder letter on Wednesday, Tesla announced that as of October 22, it had produced 7 million vehicles. The company said its newest model, the cybertruck, became the third best-selling EV in the US, trailing only the Model 3 and Model Y.

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PROFILE OF INVYGO

Started: 2018

Founders: Eslam Hussein and Pulkit Ganjoo

Based: Dubai

Sector: Transport

Size: 9 employees

Investment: $1,275,000

Investors: Class 5 Global, Equitrust, Gulf Islamic Investments, Kairos K50 and William Zeqiri

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Marathon results

Men:

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UAE currency: the story behind the money in your pockets
T20 World Cup Qualifier, Muscat

UAE FIXTURES

Friday February 18: v Ireland

Saturday February 19: v Germany

Monday February 21: v Philippines

Tuesday February 22: semi-finals

Thursday February 24: final 

England World Cup squad

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Dr Ayham Ammora, scientist and business executive

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Rooms at the Raffles Le Royal in Phnom Penh cost from $225 (Dh826) per night including taxes. Rooms at the Grand Hotel d'Angkor cost from $261 (Dh960) per night including taxes.

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A cyclo architecture tour of Phnom Penh costs from $20 (Dh75) per person for about three hours, with Khmer Architecture Tours. Tailor-made tours of all of Cambodia, or sites like Angkor alone, can be arranged by About Asia Travel. Emirates Holidays also offers packages. 

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The biog

Siblings: five brothers and one sister

Education: Bachelors in Political Science at the University of Minnesota

Interests: Swimming, tennis and the gym

Favourite place: UAE

Favourite packet food on the trip: pasta primavera

What he did to pass the time during the trip: listen to audio books

Updated: October 24, 2024, 8:02 AM`