9:39 am, October 25, 2018
TESLA Motors has delivered on chief executive Elon Musk’s promise to make money during its latest quarter after fulfilling his pledge to boost production of its first electric car designed for the mass market.
The company earned $311.5 million (circa £241.5 million) during the three months ending in September, swinging from a loss of $619 million (circa £480 million) at the same time last year.
It is only the third time Tesla has posted a quarterly profit in its eight-year history as a public company and the first time in two years.
A big jump in Tesla’s output of its mass-market Model 3 car powered the breakthrough. The manufacturing increase and money-making quarter are two things Musk promised would happen in early August. During this year’s third quarter, it made 80,142 vehicles, comprising 53,239 Model 3s and 26,903 Model S and X vehicles, and delivered 83,500 vehicles.
Revenue more than doubled from last year to $6.8 billion (circa £5.3 billion) to easily top analyst estimates, just as the profit did.
Tesla’s stock soared by 13 per cent to $326.12 (circa £252.80) after the numbers came out.
In a conference call with analysts late yesterday, Musk predicted that Tesla would remain profitable from this point on.
‘This quarter was an important step toward that,’ he said after getting choked up talking about the support Tesla’s customers had shown the company. ‘I am incredibly excited about what lies ahead.’
The third-quarter performance should help restore some of the credibility he lost after he followed up the bold profit prediction in August with a startling tweet informing the world he had secured financing to pull off a buyout of Tesla.
He later abandoned his plan and the Securities and Exchange Commission (SEC) filed a lawsuit alleging that he had misled investors because he was never close to lining up the estimated $25 billion to $50 billion (circa £19 billion to £38 billion) it would have taken to pull off the deal.
After initially denying the SEC’s accusations, Musk and Tesla agreed to pay a combined $40 million (circa £31 million) fine to resolve the case without acknowledging or denying wrongdoing.
He must also step down as Tesla’s chairman for at least three years as part of the settlement, although he can remain as chief executive of the company that has become synonymous with him.
In yesterday’s conference call, he brushed aside a question about the attributes Tesla wants in its next chairman, who is supposed to be appointed by mid-November under the SEC settlement.
He said he would only accept questions about Tesla’s operations, blocking any potential questions about the buyout proposal that landed him in trouble.
Musk was unusually restrained through most of the call, although he occasionally broke into some braggadocio. ‘I think we may have the most exciting product road map of any company on earth, by far,’ he boasted at one point.
For now, though, Tesla must focus on continuing to make money to stay afloat. About $10 billion (circa £7.7 billion) of debt has been taken on while Musk has pursued his ambition to create a viable car maker that makes vehicles running on something besides petrol or diesel.
About $1.3 billion (circa £1 billion) of that debt is due to be repaid by March, intensifying the pressure on him to stop the steady losses.
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