Tesla profit blows away expectations following Model 3 breakthrough
Tesla Inc. posted only its third quarterly profit ever and generated more cash than expected, bolstering Elon Musk’s bid to make selling electric cars a financially sustainable business.
Adjusted net income was US$2.90 a share, soundly beating analysts’ average estimate for a small loss, as the Model 3 quickly became one of the top-selling sedans in the U.S. once the company managed to resolve a series of production bottlenecks.
Free cash flow was about US$881 million, a turnabout from the billions of dollars Tesla was burning on a quarterly basis while it was struggling to ramp up the Model 3. Even as deliveries took off, Tesla managed to maintain more than US$900 million in customer deposits, showing that there’s still plenty of pent-up demand for the company’s cars.
Tesla reaffirmed its forecast for profit and positive free cash flow in the fourth quarter, adding credibility to its chief executive officer’s prediction a quarter ago that the company will make those feats routine going forward.
Tesla shares surged as much as 11 per cent after the close of regular trading Wednesday.
It has eked out profits in the past in part thanks to sales of zero-emission vehicle credits to other automakers. This did help matters last quarter, adding US$52.3 million in revenue, but the company would have pulled off a profit regardless.