(Reuters) -Tesla said on Wednesday it expects to achieve slight growth in vehicle deliveries this year and reported a higher-than-expected profit margin for the third quarter as raw material costs fell, sending shares up 7% after hours.

The company also handily beat profit expectations.

"Despite sustained macroeconomic headwinds and others pulling back on EV investments, we remain focused on expanding our vehicle and energy product lineup, reducing costs and making critical investments in AI projects and production capacity," Tesla said in a statement.

The company said it delivered growth in vehicle deliveries in the third quarter, resulting in record volumes. It also recognized its second-highest quarter of regulatory credit revenues.

Its third-quarter profit margin from vehicle sales, excluding regulatory credits, grew to 17.05% from 14.6% in the prior three-month period, according to Reuters calculations.

Wall Street had expected the figure to be 14.9%, according to 24 analysts polled by Visible Alpha.

Tesla said that the labor and material costs of making vehicles, known as the cost of goods sold per vehicle, dropped to its lowest level ever, about $35,100.

Prices of raw materials used to make EV batteries have been falling and Tesla has said its costs will decline as a result this year, with the effect diminishing over time.

The 7% rise in Tesla stock after hours added nearly

$50 billion in stock market value. The stock dropped 2% during Wednesday's trading session.

Tesla said earlier this month that its September-quarter deliveries grew by more than 6% on a year-over-year basis, marking the first quarter of growth after a decline in the January-June period.

The company slashed prices last year leading to a sharp decline in profit margins. This spring, it shifted its strategy to offering cheaper financing options and discounts that analysts have said could slow its margin bleed over the coming quarters.

Earlier this month, Tesla unveiled its robotaxi product, dubbed Cybercab, and a 20-seater self-driving van as it pushes to accelerate development of its autonomous technologies including the Optimus humanoid robot.

Revenue for the July-September quarter was $25.18 billion, compared with estimates of $25.37 billion, according to data compiled by LSEG. It reported sales of $23.35 billion in the corresponding quarter of 2023.

Adjusted profit was 72 cents per share in the third quarter, beating an average estimate of 58 cents.

The company's profit margin of 19.8% in the July-September period was higher than estimates of 17.3%, according to 21 analysts polled by LSEG. That compared with 18% in the second quarter.