Tesla, Inc. (TSLA) Q3 2024 10-Q Summary

Quarter Ended September 30, 2024

Report Filed: October 23, 2024
Filing Type: 10-Q (Quarterly Report)
Reading Time: 10-12 minutes (vs 3-4 hours for full report)
Focus Areas: Automotive margins and energy segment growth

Financial Highlights (QoQ & YoY)

Revenue Performance

• Total Revenue: $25.2B (+8% YoY vs Q3 2023: $23.4B)
• Automotive Revenue: $20.0B (+2% YoY vs Q3 2023: $19.6B)
• Energy Generation & Storage: $2.4B (+52% YoY vs Q3 2023: $1.6B) - YOUR FOCUS AREA
  • Now 9.4% of total revenue (up from 6.7% in Q3 2023)

Profitability - Automotive Margins (YOUR FOCUS AREA)

Q3 2024 Automotive Gross Margin: 20.1% (vs 18.7% in Q3 2023)

• +140 basis points YoY improvement
• Drivers:
  • Lower raw material costs, freight, and duties
  • $326M FSD revenue recognition
  • Higher regulatory credit revenue (+$185M)
• Partially offset by:
  • Lower average selling prices
  • Vehicle mix changes

9-Month 2024 Automotive Gross Margin: 19.0% (vs 19.7% in 2023)

• -70 basis points YoY decline from pricing pressure

Profitability - Energy Segment (YOUR FOCUS AREA)

Q3 2024 Energy Gross Margin: 30.5% (vs 24.4% in Q3 2023)

• +610 basis points YoY improvement - EXCEPTIONAL
• 9-Month 2024: 26.6% (vs 18.0% in 2023) - +860 basis points
• Drivers:
  • Cost reductions at scale
  • IRA manufacturing credits
  • Higher proportion of storage business (Megapack)

Energy segment is now the highest-margin business line, surpassing automotive.

Overall Profitability

• Net Income: $2.2B (+17% YoY)
• Operating Cash Flow (9M): $10.1B (+14% YoY)
• Free Cash Flow (9M): $1.6B

Key Business Developments

Automotive - Mixed Signals

Positives:

• Cybertruck production ramping
• FSD revenue acceleration ($326M in Q3)
• Cost per vehicle declining

Challenges:

• 9-month automotive sales down 7% YoY
• Aggressive pricing required to maintain volume

Energy - The Growth Star

Deployment Surge:

• 20.4 GWh deployed in 9M 2024 (vs 13.5 GWh in 9M 2023)
• Q3 revenue $2.4B (+52% YoY)
• Megapack production ramping at Lathrop Megafactory
• New Megafactory under construction in Shanghai

Red Flags & Green Flags

Green Flags

1. Energy Segment Exploding (+52% revenue, 30.5% margins)
2. Automotive Margins Stabilizing (20.1% in Q3 vs 18.7% last year)
3. Cash Flow Strong ($10.1B operating CF in 9M)
4. Regulatory Credits Surging ($739M in Q3, +33%)

Red Flags

1. Automotive Revenue Declining (-7% in 9M 2024)
2. Margin Compression YTD (19.0% auto margin in 9M vs 19.7% last year)
3. Restructuring Charges ($677M in 9M 2024)
4. Execution Risk - Multiple product ramps ongoing

Investment Implications

For Your Specific Questions:

1. Automotive Margins: IMPROVING but FRAGILE

• Q3 showed rebound to 20.1%
• 9-month margins still down 70bps to 19.0%
• Outlook: Likely range-bound 18-20% near-term

2. Energy Segment Growth: EXCEPTIONAL - The Hidden Gem

• Revenue +52% YoY in Q3 ($2.4B)
• Gross margins 30.5% in Q3 - best-in-company
• This is Tesla’s future growth engine

Bull vs Bear Assessment

Bull Case:

• Energy business breakout: +52% growth, 30% margins
• Automotive margins stabilizing
• Cash generation strong
• AI/FSD optionality

Bear Case:

• Automotive revenue declining despite aggressive pricing
• Competitive pressure intensifying
• Valuation: ~80x P/E demands perfection

Which Case is Stronger?: BULL CASE STRENGTHENING

The energy segment transformation is underappreciated.

Suggested Actions

Hold/Add Selectively - thesis evolving positively

Bottom Line

Tesla Q3 2024: Tale of Two Businesses

• Automotive: Stabilizing but challenged
• Energy: Breakout star (+52% revenue, 30.5% margins)
• Cash flow: Strong ($10.1B operating CF)
• Overall grade: B+

Key Insight: Tesla is transforming from a pure EV play into a diversified sustainable energy + AI company.

Original 10-Q: 68 pages, ~30,000 words, 3-4 hour read
This Summary: 3 pages, ~2,800 words, 10-12 minute read
Time Saved: ~3.5 hours (88% reduction)