DETROIT (AP) — Tesla’s net profit rose 17.3% in the third quarter from a year earlier on stronger electric vehicle sales, and an optimistic CEO Elon Musk forecast sales growth of 20% to 30% next year.

The strong performance changed the course of the year for the Austin, Texas-based company, which had reported declines in sales and profits in the first two quarters.

In its letter to investors, Tesla forecast slight growth in vehicle deliveries this year, better than the 1.8 million vehicles delivered worldwide in 2023.

Tesla said Wednesday that it earned $2.17 billion from July to September, higher than its profit of $1.85 billion in the same period in 2023.

The gains came despite price cuts and low-interest financing that helped boost sales of the company’s aging vehicle lineup during the quarter. It was Tesla’s first year-over-year quarterly profit increase in 2024, a year marked by falling sales and prices.

FactSet said revenue rose 7.8% to $25.18 billion in the quarter, falling short of Wall Street analysts who had estimated it at $25.47 billion. Tesla earned 72 cents per share on an adjusted basis, significantly exceeding analyst expectations of 59 cents.

Shares of Tesla Inc. rose nearly 12% in trading after the closing bell on Wednesday.

In a conference call with analysts, Musk said the profit increase came despite a difficult environment for auto sales with loan interest rates still high. “I think if you look at the global EV companies, to my knowledge no EV company is even profitable,” he said.

Musk qualified his forecast that Tesla would see vehicle sales growth of 20% to 30% in 2025, saying that this could change due to “negative external events.”

Earlier this month, Tesla said so 462,890 vehicles sold from July to September, 6.4% more than a year ago. The sales figures were better than analysts expected.

The letter said Tesla was on track to begin producing new vehicles, including more affordable models, in the first half of next year, which investors had expected. The new vehicles will use parts from current models and be manufactured on the same assembly lines as Tesla’s current model lineup, the letter said.

The new vehicles were not identified and the price was unclear. Musk has said in the past that the company is working on a car that will cost about $25,000, but said Wednesday that a new affordable vehicle, including state tax incentives, would cost less than $30,000.

Earlier this month, the company unveiled a custom-built product two-seater robotaxi called “Cybercab” at a glitzy event at a Hollywood film studio. Musk said it will go into production before 2027 and cost around $25,000.

By using parts from existing models and current manufacturing system, Tesla will not achieve the cost reductions it previously expected with a new manufacturing setup.

Tesla said it has reduced the cost of goods sold per vehicle to its lowest level ever, about $35,100.

The company’s widely watched gross profit margin, the percentage of sales it gets to keep after expenses, rose to 19.8%, its highest in a year, but still below the high of 29.1% in the first quarter 2022.

During the quarter, Tesla’s revenue from regulatory credits purchased from other automakers unable to meet government emissions targets was $739 million, the second-highest quarter in company history.

Musk said Tesla’s “Full Self-Driving” system is making progress and will drive safer than humans in the second quarter of next year. Despite the name, Teslas that use “Full Self-Driving” cannot drive themselves and human drivers must be ready to intervene at any time.

The company, he said, offers an autonomous ride-hailing service to its employees in the San Francisco Bay Area, but currently has human safety drivers. It expects to launch a robotaxi service to the public in California and Texas next year, he said.

Musk also acknowledged that it may not be possible to achieve the level of safety in autonomous driving with older editions of “Full Self-Driving” hardware. If that’s not possible, Tesla will upgrade the computers in the older cars for free, he said.

The autonomous driving claims come just five days after US safety regulators an investigation has been initiated into the system’s cameras to see in low visibility conditions such as sunlight, fog and dust in the air. The investigation raised doubts about whether the system will be ready to drive itself next year.

The National Highway Traffic Safety Administration said in documents released Friday that it had begun investigating 2.4 million Teslas after the company reported four crashes in poor visibility conditions. In one case, a woman who stopped to help after an accident on an Arizona highway was struck and killed by a Tesla.

Investigators will examine the ability of “fully autonomous driving” to “detect and respond appropriately to poor visibility conditions on the road.”

Jeff Windau, an analyst at Edward Jones, said the earnings report and conference call showed Tesla makes money from software, a high-margin business.

Still, he has a “Hold” rating on the stock as the company moves toward robotics and autonomous vehicles. “You have a lot of challenging goals ahead of you,” he said.