Tesla posts profit with Model 3 surge
The electric car maker's shares surged in after hours trading
Tesla pulled off what Chief Executive Elon Musk called an "historic quarter" for the electric car maker on Wednesday, posting a profit, positive cash flow and fatter-than-expected margins as higher production volumes of its new Model 3 began to pay off.
Its shares surged nine per cent after hours trading.
The results were a boost for the embattled company after a tumultuous quarter in which US security regulators accused Musk of fraud for tweeting that he had secured funding for a go-private deal, later abandoned.
A settlement between Musk, Tesla and the US Securities and Exchange Commission allows Musk to remain as CEO, but requires a new independent chairman to oversee an array of capital intensive new projects in 2019, from a factory in China to development of Tesla's new Model Y SUV.
Tesla said it would begin taking orders in Europe and China for the Model 3 before the end of 2018, and said only 20 percent of North American reservation-holders had cancelled their bookings.
Free cash flow of $881 million- only the third time that number has been positive in Tesla's history- was helped by a surge of new production of the Model 3, controlled spending and lower capital expenditures.
While still below the production target it set for June of 5,000 Model 3s per week, the roughly 4,300 Model 3s the company is now averaging per week were enough to boost results.
Mr Musk had vowed since May that Tesla would be profitable in both the third and fourth quarters, and has repeated that the company would not need new capital from financial backers.
Tesla said earlier this month it built 53,239 Model 3 sedans in the quarter, in line with its target of 50,000 to 55,000 vehicles, and delivered 55,840 of the cars to customers.
Mr Musk has been under intense pressure to prove he can deliver consistent production numbers for the Model 3, seen as crucial to Tesla's profitability and its ability to be a high-volume car producer.
More sales of the higher-priced versions of the Model 3 currently on offer, helped margins, which rose to over 20 percent in the quarter, Tesla said. Lower labour hours per vehicle helped, as did lower materials costs.
Total revenue more than doubled to $6.82 billion, beating analysts' average estimate of $6.33 billion, according to Refinitiv data.
Tesla ended the quarter with $3.5 billion in cash after spending $510.3 million in quarterly capital expenses.
Tesla reported a profit of $311.5 million, or $1.75 per share, for the third quarter ended Sept. 30, compared with a loss of $619.4 million, or $3.70 per share, a year earlier.
Excluding items, Tesla had a profit of $2.90 per share.
Updated: October 25, 2018 01:42 AM