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Tesla CEO Elon Musk has reason to smile after the company turned a surprise profit during the third quarter.

While Ford was lamenting a 57% drop in earnings, Tesla offered up the other side of the coin revealing a surprise third-quarter profit due to record deliveries, impressive cost cuts and improved production schedules that sent the stock soaring in after-hours trading.

“Last year, our story was about ramping the Model 3,” the company said in its quarterly letter to investors. “While total volumes are expected to grow by approximately 50% in 2019, this year our focus has been cost control and preparing for our next phase of growth.”

Not only did the company make a profit – on reduced revenue – during the quarter, its gross margins also surpassed predictions, resulting in sharing jumping 17% just after the news was released.

The company’s net income attributable to common shareholders was $143 million, or 78 cents per share, for the third quarter, compared with $311 million, or $1.75 per share, a year earlier. Revenue dropped to $6.3 billion during the quarter, a decline of 8%.

Tesla reported a profit of $1.86 per share, beating analyst expectations for a loss of 42 cents per share. It posted a cash balance increase to $5.3 billion.

The news looking forward remained positive as the company said it expects to beat the low end of its production goal of 360,000 units for the year. The company had issued a range of 360,000 to 400,000 vehicles for the year.

 

The company crowed about its manufacturing operations.

“We have also dramatically improved the pace of execution and capital efficiency of new production lines,” it said in a statement.

“Gigafactory Shanghai was built in 10 months and is ready for production, while it was ~65% less expensive (capex per unit of capacity) to build than our Model 3 production system in the US. Continued volume growth and cost control are an important combination for achieving sustained, industry-leading profitability.”

Production of its new electric SUV Model Y as well as the new plant in Shanghai making the Model 3are ahead of schedule, the company noted. Model Y production is expected to launch next summer, while Model 3 production was already underway in China.

 

“We have cleared initial milestones toward our manufacturing license and are working towards finalizing the license and meeting other governmental requirements before we begin ramping production and delivery of vehicles from Shanghai,” the company said in a statement.

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