Tesla's Q3 Surprise: Revving Up Profit Engines and Unveiling Roadmap to Innovation!

In Tesla's third-quarter earnings unveiling, with a focus on the cornerstone of their performance — the automotive business:

The average selling price of vehicles was slightly below market expectations, but not a significant concern. Although Tesla did not adjust prices for its flagship models, the Model 3/Y, in China and the U.S. during Q3, and even increased the price by 1500 euros for the Model 3 in Europe due to tariff issues, several factors contributed to this:
a. The impact of Q2 price reductions did not cover the entire quarter, but had a full-quarter effect on Q3;
b. Structural effects: the proportion of lower-priced Model 3 in the model mix increased by 2 percentage points on a quarter-over-quarter basis;
c. Incentive measures: Tesla provided low-interest loans throughout Q3 in the U.S., unlike the few weeks in Q2;
resulting in a sequential decrease of approximately $730 in the average selling price of automobiles.

2. However, what's truly astonishing this quarter is that the automotive gross margin has finally rebounded from the lows of Q2. Excluding the impact of carbon credits on revenue, the automotive gross margin increased by 2.4% to 17.1% on a quarter-over-quarter basis! This surge significantly surpassed the buyer expectations of only 15.3% and 15.7% as observed by Dolphin analysts.
Given that the average selling price is still on a downward trend, the primary reason for the margin improvement this quarter was a substantial decrease in costs.
Cost reductions stemmed partly from the cost-saving effects of increased production scale, but the predominant decrease in sales costs this quarter came from reductions in variable costs, possibly attributed to:
a. Tesla's renegotiation of raw material procurement contracts, whose impact was fully reflected in Q3, driving down material costs and cost reduction.
b. Improved gross margins from the Cybertruck, marking the first positive turn in margins.

In addition to performance, a significant positive: Musk's new car strategy. Production of the next-gen affordable model begins in H1 2025, initially using current lines. Expected 20%-30% vehicle growth next year, boosting Tesla's valuation.

After Tesla's strong performance in the third quarter, some ETF options to consider include:
Yield Shares Purpose ETF: This ETF focuses on delivering good returns, especially from high-growth stocks like Tesla, offering a potential income source.
T-REX 2X LONG TESLA DAILY TARGET ETF: This ETF aims to double the gains from Tesla's stock by using leverage, but it comes with higher risks.
1x Short TSLA ETF-Direxion: This ETF profits when Tesla's stock price falls, providing a way to benefit from potential declines in Tesla's value.