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Tesla surprises with $312M profit for Q3 as Model 3 margins soar past 20%

Tesla's Fremont factory, where all Model 3s are produced. (Tesla)

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Tesla’s third-quarter earnings for 2018 saw the California-based carmaker beat Wall Street revenue estimates after posting $6.8 billion in revenue and beating earnings estimates with a GAAP profit of $312 million.

The results, which were posted in an Update Letter to investors after the closing bell on Wednesday, October 24, showed third-quarter earnings of $1.75 per share on a GAAP-basis, shattering analyst estimates of -$.19 per share. Revenue was $6.82 billion versus an estimate of $6.33 billion. The company reported an adjusted non-GAAP profit of $512M or $2.90 per share. 

Profitability

Tesla posted a profit of $312 million, attaining the ambitious target set by CEO Elon Musk earlier this year. The electric car maker went through great lengths to reach profitability, from a 9% layoff across the company back in June to a massive delivery blitz in the third quarter that was augmented by volunteer owners who helped deliver vehicles to reservation holders.

“With average weekly Model 3 production through the quarter (excluding planned shutdowns) of roughly 4,300 units per week, we achieved GAAP net income of $312 million. We also delivered on our internal cost efficiency targets, leading to GAAP Model 3 gross margin of more than 20%, which exceeded our guidance,” Tesla stated in the update letter. 

This is the company’s first profitable quarter since Q1 2013, when the company posted a minor profit. The company also saw its free cash flow rise to $739M, versus a net loss of $436M last quarter.

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Revenue

The company’s revenue for the third quarter consisted of $6.09B in automotive revenue and $399M from the energy and battery storage division. Automotive revenue saw an increase of 82% compared to the previous quarter. The energy and battery storage division saw an increase of 6.6% compared to the previous quarter. Overall, total revenue was up  70.5% compared to Q2 and up 229% year-on-year.

The drastic increase in automotive revenue was mainly driven from the company’s Model 3 sales, which rose to over 56,000 deliveries in the quarter. Tesla deployed 93 MW of energy generation and 239 MWh of energy storage products in the third quarter as well, both of which grew over the previous quarter.

Model 3

Elon Musk once noted that the Model 3 was a “bet-the-company” vehicle — a car whose success or failure would determine Tesla’s future. The challenges that Tesla faced with the Model 3 ramp are well-documented, with Elon Musk describing the ordeal as one of the most painful periods of his career. The third-quarter proved to be a breakthrough for Tesla, though, as the company was able to make headway in both the number of vehicles produced and delivered.

The Model 3 had a gross margin exceeding 20% in the quarter. Tesla continues to expect this to rise to 25%, excluding any ZEV credits.

“Model 3 mix was strong in Q3 due to the launch of AWD and Performance variants. While the average selling price will gradually decline as we introduce lower priced variants, we are not expecting this to impact profitability. Model S and X Performance mix declined roughly 4-fold since 2015, yet Model S and X gross margin (excluding ZEV credits) continued to improve by roughly 600 basis points over the same period of time. Margin growth was caused by gradual cost improvements driven by lowering labor hours per vehicle, reduced cost of raw materials, and various other cost efficiencies. We continue to target a 25% gross margin ex-ZEV credits on Model 3.” – Tesla’s Q3 Letter

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Today’s trading session ended with TSLA down 1.92% at $288.50. After-hours, the stock was trading up  8.3% to $312.45.

Tesla’s full Q3 2018 Update Letter can be accessed here.

Simon is an experienced automotive reporter with a passion for electric cars and clean energy. Fascinated by the world envisioned by Elon Musk, he hopes to make it to Mars (at least as a tourist) someday. For stories or tips--or even to just say a simple hello--send a message to his email, simon@teslarati.com or his handle on X, @ResidentSponge.

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Investor's Corner

Tesla just got a weird price target boost from a notable bear

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Credit: Tesla Manufacturing

Tesla stock (NASDAQ: TSLA) just got a weird price target boost from a notable bear just a day after it announced its strongest quarter in terms of vehicle deliveries and energy deployments.

JPMorgan raised its price target on Tesla shares from $115 to $150. It maintained its ‘Underweight’ rating on the stock.

Despite Tesla reporting 497,099 deliveries, about 12 percent above the 443,000 anticipated from the consensus, JPMorgan is still skeptical that the company can keep up its momentum, stating most of its Q3 strength came from leaning on the removal of the $7,500 EV tax credit, which expired on September 30.

Tesla hits record vehicle deliveries and energy deployments in Q3 2025

The firm said Tesla benefited from a “temporary stronger-than-expected industry-wide pull-forward” as the tax credit expired. It is no secret that consumers flocked to the company this past quarter to take advantage of the credit.

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The bump will need to be solidified as the start of a continuing trend of strong vehicle deliveries, the firm said in a note to investors. Analysts said that one quarter of strength was “too soon to declare Tesla as having sustainably returned to growth in its core business.”

JPMorgan does not anticipate Tesla having strong showings with vehicle deliveries after Q4.

There are two distinct things that stick out with this note: the first is the lack of recognition of other parts of Tesla’s business, and the confusion that surrounds future quarters.

JPMorgan did not identify Tesla’s strength in autonomy, energy storage, or robotics, with autonomy and robotics being the main focuses of the company’s future. Tesla’s Full Self-Driving and Robotaxi efforts are incredibly relevant and drive more impact moving forward than vehicle deliveries.

Additionally, the confusion surrounding future delivery numbers in quarters past Q3 is evident.

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Will Tesla thrive without the EV tax credit? Five reasons why they might

Tesla will receive some assistance from deliveries of vehicles that will reach customers in Q4, but will still qualify for the credit under the IRS’s revised rules. It will also likely introduce an affordable model this quarter, which should have a drastic impact on deliveries depending on pricing.

Tesla shares are trading at $422.40 at 2:35 p.m. on the East Coast.

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Investor's Corner

Tesla Q3 deliveries expected to exceed 440k as Benchmark holds $475 target

Tesla stock ended the third quarter at $444.72 per share, giving the EV maker a market cap of $1.479 trillion at the end of Q3 2025. 

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(Credit: Tesla)

Benchmark has reiterated its “Buy” rating and $475 price target on Tesla stock (NASDAQ: TSLA) as the company prepares to report its third-quarter vehicle deliveries in the coming days. 

Tesla stock ended the third quarter at $444.72 per share, giving the EV maker a market cap of $1.479 trillion at the end of Q3 2025. 

Benchmark’s estimates

Benchmark analyst Mickey Legg noted that he expects Tesla’s deliveries to hit around 442,000 vehicles this Q3, which is under the 448,000-unit consensus but still well above the 384,000 vehicles that the company reported in Q2 2025. According to the analyst, some optimistic estimates for Tesla’s Q3 deliveries are as high as mid-460,000s.

“Tesla is expected to report 3Q25 global production and deliveries on Thursday. We model 442,000 deliveries versus ~448,000 for FactSet consensus with some high-side calls in the mid-460,000s. A solid sequential uptick off 2Q25’s ~384,000, a measured setup into year-end given a choppy incentive/pricing backdrop,” the analyst wrote.

Benchmark is not the only firm that holds an optimistic outlook on Tesla’s Q3 results. Deutsche Bank raised its own delivery forecast to 461,500, while Piper Sandler lifted its price target to $500 following a visit to China to assess market conditions. Cantor Fitzgerald also reiterated an “Overweight” rating and $355 price target for TSLA stock.

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Stock momentum meets competitive headwinds

Tesla’s anticipated Q3 results are boosted in part by the impending expiration of the federal EV tax credit in the United States, which analysts believe has encouraged buyers to finalize vehicle purchases sooner, as noted in an Investing.com report.

Tesla shares have surged nearly 30% in September, raising expectations for a strong delivery report. Benchmark warned, however, that some volatility may emerge in the coming quarter.

“With the stock up sharply into the print (roughly ~28-32% in September), its positioning raises the bar for an upside surprise to translate into further near-term strength; we also see risk of volatility if regional mix or ASPs underwhelm. We continue to anticipate policy-driven choppiness after 3Q as certain EV incentives/credits tighten or roll off in select markets, potentially creating 4Q demand air pockets and order-book lumpiness,” the analyst wrote.

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Elon Musk

Elon Musk slams ING Deutschland for denying TSLA shareholders ability to vote

Musk posted his criticism of the firm in a post on social media platform X. 

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MINISTÉRIO DAS COMUNICAÇÕES, CC BY 2.0 , via Wikimedia Commons

Elon Musk has slammed ING Deutschland after the bank confirmed that it was not offering a way for clients to vote in the upcoming 2025 Tesla Annual Shareholders Meeting.

Musk posted his criticism of the firm in a post on social media platform X. 

Musk’s criticism

Musk’s criticism of ING Deutschland came as a response to the bank’s comment to a Tesla shareholder. The shareholder, Maximilian Auer, noted that he has not received a response from the German bank’s customer support on how he could vote with his TSLA shares. In response to the Auer’s comment, ING Deutschland confirmed that it does not offer such a service.

“We do not offer the proxy voting process or the transmission of a control number. There is no legal obligation to do so for general meetings under foreign law,” ING Deutschland wrote in its post.

The firm’s reply received a lot of criticism from users on X, with many stating that such comments could drive clients away. Elon Musk later weighed in with some strong words of his own, stating that the bank is effectively denying shareholders the ability to vote. “Denying shareholders the ability to vote, as you are doing, certainly should be a crime,” Musk wrote in a post on X.

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Tesla’s annual meeting

Tesla’s upcoming annual meeting this year is particularly important as shareholders are voting on the approval of Elon Musk’s new CEO performance award. The pay package, which could pave the way for Musk to become a trillionaire, is also designed to increase his stake in the electric vehicle maker to 25%. This, Musk stated, should prevent activist shareholder advisory firms to disrupt the company.

Tesla highlighted the importance of this year’s annual meeting in a post on X. 

“We pay for outstanding performance – not for promises. In 2018, shareholders approved a groundbreaking CEO Performance Award that delivered extraordinary value. At our Annual Meeting on November 6, Tesla shareholders can vote on a pay-for-performance plan designed to drive our next era of transformational growth and value creation. Seven years ago, Elon Musk had to deliver billions to shareholders – now it’s trillions.

“This plan creates a path for Elon to secure voting rights and will retain him as a leader of the company for many years to come. But as explained below, Elon only receives voting rights after he has delivered economic value to you. Your vote matters. Vote ‘FOR’ Proposal 4!” Tesla wrote in its post on X. 

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