Tesla Inc reports $311mn quarterly profit

The profit is seen as a delivery of promise by CEO Elon Musk

Thursday, 25th October 2018

Tesla Inc reported a net profit of $311mn, positive cash flow and wider than expected margins for the latest quarter on Wednesday.

The profit is seen as a delivery of promise by CEO Elon Musk to turn the company profitable as higher production volumes of its new model began to pay off.

While assuring that Tesla was on a track to be profitable again in the fourth quarter in a letter to the investors, he also called the quarter historic and gave the credit for the profits to the firm's "ingenuity and incredible hard work".

Free cash flow at $881 million was positive for only the third time in Tesla's history and was helped by a surge of new production of the Model 3, lower capital expenditures, and more efficient use of working capital.

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 56,065 of the cars to customers.

More sales of the higher-priced versions of the Model 3 currently on offer helped margins which rose to over 20 percent in the quarter, Tesla said, above its projection of 15 percent margins. Lower labour hours per vehicle helped, as did lower material costs.

Total revenue more than doubled to $6.82 billion (£5.3 billion), beating analysts' average estimate of $6.33 billion, according to Refinitiv data.

Tesla ended the quarter with $3.5 billion in cash after spending $510.3 million in quarterly capital expenses. It said cash would remain at least unchanged in the fourth quarter, despite a repayment of $230 million in convertible notes coming due.