Jamie Spencer
Tesla’s stock had its best day in more than a decade on Thursday, surging 22% after the electric vehicle (EV) giant exceeded earnings estimates and confirmed plans to begin production of a lower-cost model early next year. This marked Tesla’s biggest one-day gain since May 2013, when the company reported quarterly sales of $500 million for the first time. In contrast, Tesla’s vehicle sales in the most recent quarter exceeded $20 billion, showcasing its dramatic growth over the past decade.
Tesla’s Rally Boosts Automobiles Index
Tesla’s massive stock surge propelled the S&P 500’s Automobiles Industry Index upward by more than 18% on Thursday. However, the performance of other automakers was mixed, with General Motors (GM) slipping and Ford (F) gaining ground. Meanwhile, Uber (UBER) shares slid nearly 2% after reaching record highs earlier this month. Tesla’s recent announcement of its robotaxi plans has not convinced investors that it poses a significant threat to the ride-sharing giant.
Why Tesla’s Stock Jumped
Tesla’s stock surge followed the company’s earnings report on Wednesday night, where it was revealed that automotive profit margins had improved for the first time since early 2022. This was a crucial development for Tesla, as its core car business had been under pressure due to a price war in China and weakening demand in the U.S.
Elon Musk, Tesla’s CEO, assured investors that production plans for new, more affordable vehicles remain on track, with the goal of starting production in the first half of 2025. This news helped ease concerns that Musk’s focus on robotaxis and artificial intelligence (AI) would delay the introduction of a lower-cost EV model, a key part of Tesla’s strategy to expand its customer base.
Musk also outlined several ambitious goals during the company’s earnings call, including his vision to make Tesla the world’s most valuable company “by a long shot” and achieve vehicle growth of 20% to 30% in 2025. While Tesla’s total car sales have fallen 2% this year compared to 2023, Musk’s optimism about future growth has boosted investor confidence.
Tesla’s Path Forward
Despite challenges in the global EV market, Tesla continues to position itself as a leader in the industry. The commitment to producing a lower-cost model in 2025 is likely to play a key role in increasing market share and driving future sales. Investors are closely watching Tesla’s next moves, particularly how the company balances its focus on affordable EVs with its ongoing investment in AI and autonomous vehicles.
The company’s performance in 2024 and beyond will depend on its ability to deliver on these promises, continue improving profit margins, and maintain its competitive edge in both the U.S. and international markets.
Tesla’s 22% stock surge on Thursday highlights renewed investor confidence in the company’s growth potential. With improving profit margins and a clear timeline for producing a lower-cost model, Tesla appears poised to maintain its dominance in the EV market. As the company looks ahead to 2025, investors will be watching closely to see how Elon Musk’s ambitious goals play out in a highly competitive landscape.
