Tesla rallies as Elon delivers on Q3 profit

Tesla shares spiked as much as 10 percent in after-hours trading as a contrite Elon Musk made good on his promise to deliver profits from the company’s massmarket Model 3 sedan.

The embattled CEO pledged back in May that Tesla would be profitable in both the third and fourth quarters and as a result would not need to raise new capital.

Musk, whose voice briefly cracked during an earnings call with analysts, thanked Tesla customers for their support through “what has actually been a very difficult time.”

“I’ve said before that we must prove that Tesla can be sustainably profitable,” Musk said. “This quarter was a big step towards that.”

The electric-car maker posted surprisingly strong third-quarter revenue of $6.8 billion — half a billion more than Wall Street had expected. Earnings excluding items were $2.90 per share, compared with expectations for a 15-cent per-share loss as tracked by FactSet.

A production surge in the quarter helped. Tesla said it produced 5,300 Model 3s in the last week of the third quarter, compared with 5,000 in the past quarter.

Tesla is under intense pressure to ramp up production numbers for the Model 3, seen as crucial to its profitability and ability to be a mass-market car producer.

More sales of the higher-priced versions of the Model 3, which carry larger margins, will help profitability. Tesla said the Model 3’s gross margin was more than 20 percent in the reported quarter.

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.

Including one-time charges, Tesla reported a profit of $311.5 million, or $1.75 per share, for the quarter ended Sept. 30, compared with a loss of $619.4 million, or $3.70 per share, a year earlier.

Driven by a “sharp increase” in Model 3 deliveries, Tesla’s overall revenue surged 82 percent from the previous quarter as it delivered 70,000 vehicles.

Tesla shares soared 11 percent in the after market, trading around $320 a share.