Tesla Inc. surged nearly 22% on Thursday, adding approximately $150 billion to its market value. The stock’s biggest rally since May 2013 came after CEO Elon Musk assured investors with a confident forecast of up to 30% sales growth for 2025, emphasizing a continued focus on electric vehicles (EVs).
Tesla’s stock closed at a session high of $262.2 with trading volumes reaching 200 million shares. This substantial gain calmed concerns that recent developments, such as Musk’s pursuit of new ventures like robotaxis, were diverting attention from Tesla’s core EV business.
Musk also committed to launching an affordable EV in early 2025, a move seen as critical to broadening Tesla’s market reach. He highlighted significant cost reductions in production, stating that Tesla’s cost of goods sold per vehicle reached its lowest level yet at around $35,100 in Q3 2024, an improvement that directly boosted margins.
“This rally looks to be a relief for investors who were uneasy with Musk’s recent projects,” said Ed Egilinsky, managing director at Direxion, suggesting the jump also stemmed from short covering. Short interest in Tesla’s stock stood at 2.33% by September-end, according to data from LSEG.
Growth and Cost Cuts Drive Tesla’s Performance
Tesla’s efforts to cut labour and material costs were reflected in its latest earnings, where the company also generated $326 million from its Full Self-Driving (FSD) software, used in Tesla’s autonomous driving systems. Seth Goldstein, equity strategist at Morningstar, noted, “FSD has been central to Tesla’s higher margins, but lower production costs had the most immediate impact this quarter.”
Looking ahead, Musk reiterated Tesla’s commitment to autonomous mobility, aiming to enable paid driverless ride-hailing services as early as next year. However, regulatory challenges remain significant, particularly for the FSD feature set to underpin Tesla’s ambitious robotaxi services.
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