Tesla achieves profit beat on deliveries, cost cuts

Tesla Inc on Wednesday surprised investors by posting a profitable third quarter, boosted by record deliveries, cost cuts and improved production schedules for its new electric vehicle model, causing shares to soar in after-market trading.

The carmaker’s gross margins, an important profit indicator for investors, exceeded expectations and Tesla said it was “highly confident” in exceeding the low end of its yearly global vehicle delivery goal.

Shares rose 17 per cent after hours on the surprise news, in which Tesla posted a cash balance increase to US$5.3 billion. The carmaker reported a profit of US$1.86 per share, far beating analyst expectations for a loss of 42 cents per share.

Investors have shown impatience with the company’s serial failures to meet financial and production targets in the past. Earlier this month, Tesla shares slumped after the company reported delivering 97,000 vehicles for the third quarter, just short of analysts’ forecasts

and only two per cent ahead of the previous quarter.

But Tesla on Wednesday exceeded promises by its billionaire chief executive Elon Musk, who in July said Tesla would break even in the third quarter and turn a profit by the end of 2019.

The firm has said it plans to deliver 360,000 to 400,000 vehicles for all of 2019, and on Wednesday said it was “highly confident in exceeding 360,000 deliveries this year.”

The company also said production of its new electric SUV Model Y and its Model 3 vehicle factory in Shanghai were ahead of schedule. Model Y production is expected to launch by the summer of 2020, while production of full vehicles on a trial basis was already underway in Shanghai, Tesla said. Reuters