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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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Tesla analyst issues stern warning to investors: forget Trump-Musk feud

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Credit: Tesla

A Tesla analyst today said that investors should not lose sight of what is truly important in the grand scheme of being a shareholder, and that any near-term drama between CEO Elon Musk and U.S. President Donald Trump should not outshine the progress made by the company.

Gene Munster of Deepwater Management said that Tesla’s progress in autonomy is a much larger influence and a significantly bigger part of the company’s story than any disagreement between political policies.

Munster appeared on CNBC‘s “Closing Bell” yesterday to reiterate this point:

“One thing that is critical for Tesla investors to remember is that what’s going on with the business, with autonomy, the progress that they’re making, albeit early, is much bigger than any feud that is going to happen week-to-week between the President and Elon. So, I understand the reaction, but ultimately, I think that cooler heads will prevail. If they don’t, autonomy is still coming, one way or the other.”

This is a point that other analysts like Dan Ives of Wedbush and Cathie Wood of ARK Invest also made yesterday.

On two occasions over the past month, Musk and President Trump have gotten involved in a very public disagreement over the “Big Beautiful Bill,” which officially passed through the Senate yesterday and is making its way to the House of Representatives.

Tesla analysts believe Musk and Trump feud will pass

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Musk is upset with the spending in the bill, while President Trump continues to reiterate that the Tesla CEO is only frustrated with the removal of an “EV mandate,” which does not exist federally, nor is it something Musk has expressed any frustration with.

In fact, Musk has pushed back against keeping federal subsidies for EVs, as long as gas and oil subsidies are also removed.

Nevertheless, Ives and Wood both said yesterday that they believe the political hardship between Musk and President Trump will pass because both realize the world is a better place with them on the same team.

Munster’s perspective is that, even though Musk’s feud with President Trump could apply near-term pressure to the stock, the company’s progress in autonomy is an indication that, in the long term, Tesla is set up to succeed.

Tesla launched its Robotaxi platform in Austin on June 22 and is expanding access to more members of the public. Austin residents are now reporting that they have been invited to join the program.

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Tesla surges following better-than-expected delivery report

Tesla saw some positive momentum during trading hours as it reported its deliveries for Q2.

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(Credit: Tesla)

Tesla (NASDAQ: TSLA) surged over four percent on Wednesday morning after the company reported better-than-expected deliveries. It was nearly right on consensus estimations, as Wall Street predicted the company would deliver 385,000 cars in Q2.

Tesla reported that it delivered 384,122 vehicles in Q2. Many, including those inside the Tesla community, were anticipating deliveries in the 340,000 to 360,000 range, while Wall Street seemed to get it just right.

Tesla delivers 384,000 vehicles in Q2 2025, deploys 9.6 GWh in energy storage

Despite Tesla meeting consensus estimations, there were real concerns about what the company would report for Q2.

There were reportedly brief pauses in production at Gigafactory Texas during the quarter and the ramp of the new Model Y configuration across the globe were expected to provide headwinds for the EV maker during the quarter.

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At noon on the East Coast, Tesla shares were up about 4.5 percent.

It is expected that Tesla will likely equal the number of deliveries it completed in both of the past two years.

It has hovered at the 1.8 million mark since 2023, and it seems it is right on pace to match that once again. Early last year, Tesla said that annual growth would be “notably lower” than expected due to its development of a new vehicle platform, which will enable more affordable models to be offered to the public.

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These cars are expected to be unveiled at some point this year, as Tesla said they were “on track” to be produced in the first half of the year. Tesla has yet to unveil these vehicle designs to the public.

Dan Ives of Wedbush said in a note to investors this morning that the company’s rebound in China in June reflects good things to come, especially given the Model Y and its ramp across the world.

He also said that Musk’s commitment to the company and return from politics played a major role in the company’s performance in Q2:

“If Musk continues to lead and remain in the driver’s seat, we believe Tesla is on a path to an accelerated growth path over the coming years with deliveries expected to ramp in the back-half of 2025 following the Model Y refresh cycle.”

Ives maintained his $500 price target and the ‘Outperform’ rating he held on the stock:

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“Tesla’s future is in many ways the brightest it’s ever been in our view given autonomous, FSD, robotics, and many other technology innovations now on the horizon with 90% of the valuation being driven by autonomous and robotics over the coming years but Musk needs to focus on driving Tesla and not putting his political views first. We maintain our OUTPERFORM and $500 PT.”

Moving forward, investors will look to see some gradual growth over the next few quarters. At worst, Tesla should look to match 2023 and 2024 full-year delivery figures, which could be beaten if the automaker can offer those affordable models by the end of the year.

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Investor's Corner

Tesla delivers 384,000 vehicles in Q2 2025, deploys 9.6 GWh in energy storage

The quarter’s 9.6 GWh energy storage deployment marks one of Tesla’s highest to date.

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Credit: Tesla

Tesla (NASDAQ: TSLA) has released its Q2 2025 vehicle delivery and production report. As per the report, the company delivered over 384,000 vehicles in the second quarter of 2025, while deploying 9.6 GWh in energy storage. Vehicle production also reached 410,244 units for the quarter.

Model 3/Y dominates output, ahead of earnings call

Of the 410,244 vehicles produced during the quarter, 396,835 were Model 3 and Model Y units, while 13,409 were attributed to Tesla’s other models, which includes the Cybertruck and Model S/X variants. Deliveries followed a similar pattern, with 373,728 Model 3/Ys delivered and 10,394 from other models, totaling 384,122.

The quarter’s 9.6 GWh energy storage deployment marks one of Tesla’s highest to date, signaling continued strength in the Megapack and Powerwall segments.

Credit: Tesla Investor Relations

Year-on-year deliveries edge down, but energy shows resilience

Tesla will share its full Q2 2025 earnings results after the market closes on Wednesday, July 23, 2025, with a live earnings call scheduled for 4:30 p.m. CT / 5:30 p.m. ET. The company will publish its quarterly update at ir.tesla.com, followed by a Q&A webcast featuring company leadership. Executives such as CEO Elon Musk are expected to be in attendance.

Tesla investors are expected to inquire about several of the company’s ongoing projects in the upcoming Q2 2025 earnings call. Expected topics include the new Model Y ramp across the United States, China, and Germany, as well as the ramp of FSD in territories outside the US and China. Questions about the company’s Robotaxi business, as well as the long-referenced but yet to be announced affordable models are also expected.

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