Tesla earnings are today. Here's what to know

Tesla (TSLA-0.55%) on Wednesday is expected to report its earnings for the July to September quarter, offering a fresh chance for Wall Street to interrogate CEO Elon Musk on his plans.

The Austin, Texas-based company has a number of challenges on the horizon, namely its plans to transform largely into a firm focused on artificial intelligence and robotics.

Investors are looking for details on how Tesla plans to boost sales of its popular, but aging, electric vehicles, while developing its AI and robotics technology, and trying to win over regulators. They’re also interested in Tesla’s products currently under development, like the Tesla Roadster.

Here’s what you need to know ahead of Tesla’s third-quarter earnings report.

Expect the Cybercab to dominate

Tesla, on Oct. 10, delivered its first product demonstration for the Cybercab, a planned autonomous vehicle that will eventually be part of the automaker’s planned network of robotaxis. But beyond what we can see of the vehicle — its “butterfly wing” doors, lack of steering wheel or pedals, two seats, and large trunk — not much is known about it or the robotaxi network.

Analysts will be looking to Musk to offer some more refined details than what was offered at the launch event, titled “We, Robot.” That will likely include Tesla’s estimated production costs, market size, timeline for regulatory approval, and other dull — but necessary — details left out of Musk’s spectacle.

“In contrast to most investor events these days, this was more akin to a show followed by a big party,” Deutsche Bank (DB+2.75%) analysts said after the event, adding that “we generally came away underwhelmed by the lack of details disclosed and short length of the Cybercab demo ride.”

Many valuations of Tesla’s current and future stock price account for a planned robotaxi network. But such a network, which Musk has called a “combination of Airbnb and Uber (UBER+0.76%),” isn’t expected for years to come. At the event, Musk seemed to encourage people — especially current drivers for Uber and Lyft (LYFT+2.01%), who often aren’t very wealthy — to buy multiple Cybercabs.

It’s unclear whether or not Tesla would let its Cybercabs be used on non-Tesla networks such as Uber’s or how the profits would be shared between a network operator and the car owner. Either way, J.P. Morgan (JPM+1.58%) analysts have said, shifting from a Tesla-operated robotaxi network to selling those vehicles wouldn’t be a welcome prospect.

Tesla expects the Cybercab to eventually be available for sale to consumers at less than $30,000, but it won’t enter production “before 2027,” according to Musk. It’s unclear whether Tesla is working on a $25,000 electric car, which has reportedly been scrapped or delayed in favor of the Cybercab, but is still on analysts’ wishlists.

Earlier this month, Tesla also demonstrated its Optimus humanoid robots and unveiled a planned autonomous vehicle capable of carrying 20 passengers, the Robovan. Investors are looking for details on those products, as well as an update on the fate of the $25,000 vehicle, the Tesla Semi, and Musk’s long-awaited — and delayed — Roadster sports car. 

The next-generation Roadster was unveiled in 2017 and expected to make its return in 2021, before it was hit with delays after delays. Musk has previously said a prototype for the next-generation model should be unveiled by the end of this year, with production starting in 2025, but updates have been scarce.

A regulatory dilemma

Musk earlier this month provided an optimistic timeline to make Tesla’s vehicles fully autonomous.

“We do expect to start fully autonomous unsupervised [Full Self-Driving mode] in Texas and California next year,” Musk said at the Oct. 10 event, where some 30 Model Y cars drove autonomously in the limited proving grounds of Warner Bros. Discovery’s (WBD+2.42%) Hollywood lot.

Tesla’s other vehicles — the Model S, Model X, and the Cybertruck — would get access down the road and that access would be expanded into other regions of the U.S. later on, according to Musk. But such an eventuality is muddled given Tesla’s numerous regulatory concerns and lawsuits.

Federal regulators on Friday launched a new investigation into Tesla’s technology after one of its vehicles equipped with Full Self-Driving fatally struck a pedestrian. The National Highway Traffic Safety Administration has opened at least five investigations of Tesla.

And although Tesla has said it expects to launch FSD in China in the first quarter of 2025, the rollout is expected to be delayed, CNEVPOST reports, citing the Beijing-owned China Daily.

What’s going on with sales?

Tesla has, so far, sold more than 1.29 million electric vehicles in 2024. That’s not a small amount of cars. But it doesn’t give the company much wiggle room to reach 1.8 million sales by the end of the year. In 2023, it sold 1.81 million units.

To hit that target, Tesla will need to sell more than 516,000 vehicles between October and December. Its best quarterly performance to date was in the third quarter of 2023, when it delivered more than 484,000 units to customers.

Analysts currently expect deliveries of 472,000 vehicles for the fourth quarter, according to a handful of estimates compiled by FactSet (FDS+0.46%). That would put total deliveries at 1.76 million, or a slip of 2%. Deliveries could miss by slimmer margins of 0.3%, according to 18 analysts polled by LSEG.

Wall Street will also be eyeing Tesla’s gross margins, as the carmaker has slashed prices to boost demand. In China, Tesla has introduced a series of incentives, such as low-cost financing options to drive demand in the competitive market.

Analysts expect Tesla to record gross margins of 14.7% for the July to September quarter, compared to 16.3% a year earlier and 14.6% during the second quarter of 2024. Wall Street wants to see margins inch closer to 20% ahead of 2025 to renew confidence, according to Wedbush Securities analyst Dan Ives.

“We need to start seeing this key metric head into the high teens for 3Q/4Q to give the Street comfort much of the price cuts are in the rearview mirror showing better margin days are ahead for 2025,” Ives wrote Monday.

The average Tesla sold for $58,212 last month, according to Kelly Blue Book, although those figures are heavily skewed by the Cybertruck, a pricy electric pickup truck. Cybertruck sales are expected to slow in the coming months, as Tesla’s backlog of reservation holders appear to be largely holding off on buying the expensive vehicle.

Earnings per share are expected to hit 60 cents, down from 66 cents a year ag0, but up from 52 cents last quarter, according to FactSet. Revenue is expected to reach $25.4 billion, compared to $23.3 billion in the third quarter of 2023 and $25.5 billion during the prior quarter.