Tesla delivers on Elon Musk's profit pledge

Share

Model 3 unit sales tripled in the third quarter, according to Tesla, to 55,280.

Tesla is showing some promising signs that it will make money as advertised in the third quarter, but Wall Street isn't buying it.

Tesla, which is on a quest to produce 5,000 Model 3 sedans per week, reported an average weekly production of 4,300 vehicles.

"Production numbers earlier this month meant we already knew Tesla could churn out the cars", said Nicholas Hyett, an analyst at Hargreaves Lansdown. "To say Tesla's answer is emphatic is an understatement".

"While the media has been focused on Elon Musk's eccentric, outlandish and at times offensive behavior, it has failed to notice the legitimate disruption of the auto industry that is now being DOMINATED by Tesla", Left wrote in his note, which helped send Tesla shares up almost 13% on Tuesday.

More news: Trump criticizes Saudi account of Khashoggi's death, claiming 'deception'

Tesla says that almost 70,000 of those vehicles were delivered to the U.S. And it reported that Model S and Model X will continue to be impacted by a 40 percent import duty in China, but the automaker is working to accelerate its manufacturing timeline for China with more localized versions of the Model 3 for that market. The company racked up its first strong volume on Model 3 production in the third quarter, almost doubling the number of cars manufactured in the previous quarter to 53,239.

"Q3 2018 was a truly historic quarter for Tesla", the company said in a press release. Lower labor hours per vehicle helped, as did lower material costs. Revenues rose more than 70 percent to $6.2 billion, and free cash flows came in at $881 million. It said cash would remain at least flat in the fourth quarter, despite a repayment of $230 million in convertible notes coming due.

The company earned $311.5 million during the three months ending in September, swinging from a loss $619 million at the same time a year ago. As can be expected from Tesla, some of the most revealing statements the automaker has made in some time were nested within the financial update.

Tesla faces pressing cash needs at its Fremont, California factory, where the company is hoping to eventually increase its production rate to 10,000 Model 3s per week.

Its sprawling Gigafactory battery factory outside Reno, Nevada is only partially complete, and plans for assembly plants in Europe and China are both big-ticket items on the horizon.

Share