Tesla Inc’s stock shot up nearly 12 percent in pre-market trade yesterday, a day after it forecast surging car sales growth, reassuring investors that CEO Elon Musk is still looking to expand the company’s core business of selling electric vehicles (EVs).
Musk has been pivoting Tesla into an artificial intelligence (AI) and robotics company from an EV market leader, but has so far failed to lay out a detailed business plan for his new focus.
On Wednesday, the company reported third-quarter profits of US$2.2 billion, up 17.3 percent from a year earlier, as well as an 8 percent increase in revenue to US$25.2 billion.
Photo: Bloomberg
The outspoken Musk offered a bullish outlook on Tesla’s prospects, pointing to the strong results as evidence the company’s ambitious vision is being realized.
“Tesla is focused on building the future of energy, transport, robotics and AI, and this is a time when others are just focused on managing around near-term trends,” Musk said on an earnings call.
He forecast 20 to 30 percent sales growth next year and said efforts to slash production costs would boost margins.
“He definitely seemed more passionate and invested in it this time,” said Jessica Caldwell, head of insights at car research and buying Web site Edmunds.
“I feel like so much of Tesla is tied up in the future, but we need to figure out how you get there. That’s what people needed to hear and they were a little bit better in providing those details than they have been in the past,”Caldwell said.
The results followed a flashy event this month to unveil a two-seater robotaxi dubbed Cybercab that would go into production in 2026 without a steering wheel or pedals and cost less than US$30,000 to buy. The event also featured a 20-seat driverless van and humanoid robots that danced for attendees.
Disappointed by the lack of some key details on how quickly Tesla could ramp up robotaxi production and clear inevitable regulatory hurdles, investors punished the company’s stock after that event.
Musk on Wednesday said Tesla aims to produce at least 2 million Cybercabs a year and expected Tesla vehicles to offer paid, driverless, ride-hailing services next year, doubling down on his promise made at the robotaxi event. He said the company was already testing the operations with its employees in the San Francisco Bay Area.
However, that plan is likely to face significant regulatory challenges.
Musk himself acknowledged on Wednesday the potential difficulties in getting approvals in California, saying “it’s not something we totally control,” but adding: “I would be shocked if we don’t get approval next year.”
For now, encouraging fundamentals of the core EV business are likely to keep the heat off Musk. Until next quarter.
“Capturing sales in today’s challenging market and streamlining operations aren’t as sexy as self-driving cabs and dancing robots,” Caldwell said. “But they’re critical toward funding the company’s long-term vision for the future.”
Additional reporting by AFP
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