Tesla (NASDAQ:TSLA) updated investors with its third quarter report last night, and the stock is surging as a result. The report contained a lot of good news as well as comments from CEO Elon Musk on the quarterly conference call.

As a result, the stock was trading 16.8% higher as of 10:40 a.m. ET. The big step has brought Tesla shares back into the black this year.

The list of factors weighing on investors today begins with profitability and liquidity. Tesla beat analysts' expectations with adjusted earnings per share of $0.72. The average estimate was a profit of $0.58. This was achieved because the company's electric car sales were more profitable than many expected. Tesla reported an operating profit margin of 10.8%. This is the highest value since the first quarter of 2023. For comparison: 5.5% and 6.3% in the first and second quarters of 2024, respectively.

Tesla also said it generated robust free cash flow of $2.7 billion in the quarter. The company is using this excess cash to fund its plans to introduce fully self-driving cars, improved software and possibly a network of robotaxis. These future plans are what investors look for when valuing Tesla stock at its lofty levels. Tesla stock's price-to-earnings ratio is close to 70, almost three times that of the overall market.

The reaction in the stock was also due to Musk's statements in the investor conference call. He expects vehicle sales to increase by 20% to 30% in 2025, meaning up to 2.3 million deliveries in 2025. Perhaps more important was his comment that Tesla is “on track to deliver our affordable models starting in the first half of 2025.” Investors have long been clamoring for cheaper cars that appeal to a broader group of potential electric vehicle (EV) buyers.

Elsewhere, Tesla is also seeing strong growth in its energy business, with storage usage increasing 75% year-over-year. This combination of results and 2025 expectations is sending the stock soaring today.

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