Tesla Extended Profit Streak With Record Quarterly Sales
October 21 2020 - 05:04PM
Dow Jones News
By Heather Somerville
Tesla Inc. extended its profitability streak in the third
quarter, defying the global economic turmoil wrought by the
coronavirus pandemic and bolstering the outlook for mass-market
electric vehicles.
The Silicon Valley car maker on Wednesday posted a net profit of
$331 million for the three-month period ended Sept. 30. It marks
Tesla's fifth-consecutive quarter in the black and keeps the
company on track for 2020 to be the first calendar year of
profitability after years of losses.
Tesla also revived a pre-pandemic target to build at least
500,000 vehicles this year, which Chief Executive Elon Musk laid
out in January, an increase of at least 36% from last year. Tesla
didn't formally withdraw that guidance, but until now had largely
ignored the projection that seemed improbable at the onset of the
pandemic, when it temporarily shut down its lone U.S. factory as
local health officials worked to contain the spread of the
coronavirus.
"While achieving this goal has become more difficult, delivering
half a million vehicles in 2020 remains our target," the company
said.
The company was buoyed by efficiencies in manufacturing,
including lower labor costs at its production facility in China, as
well as growing demand in that country for electric cars. Its
ability to sell emission credits to rivals to meet regulatory
requirements has padded the bottom line.
Tesla on Wednesday reported a record $8.77 billion in revenue
for the quarter, a 39% jump from a year ago. Analysts surveyed by
FactSet expected sales of $8.28 billion.
Shares were up nearly 4% to about $438 in after-hours trading.
Tesla shares have roughly quintupled since the start of the
year.
Earlier this month, Tesla reported record car sales for the
third quarter, with 139,593 vehicle deliveries in the period, a
record that suggested the target of 500,000 deliveries for the year
was in reach.
Tesla has been trying to cut costs and build cars more
efficiently in part to reflect a shift in customers that are
increasingly buying its more-affordable Model 3 car and Model Y
sport-utility vehicle, rather than the higher-priced models that
would contribute a larger profit.
Mr. Musk's goal to turn electric vehicles from a niche market to
having mass-market appeal appeared to gain traction in the second
half of last year as Model 3 sales fueled massive growth, and after
Tesla successfully opened its first overseas assembly factory in
China, where the company has churned out cars with lower-cost
labor. Tesla posted a $143 million profit in the third quarter of
last year, and has stayed profitable since.
Mr. Musk has laid out a bold vision to be the world's largest
auto maker, although the entrepreneur has been prone to hyperbole.
At a shareholder event last month, he said he expects Tesla to
build 20 million cars annually within the decade, and laid out a
plan to use lower-cost batteries to make a $25,000 electric
vehicle, which would be significantly cheaper than anything Tesla
currently sells.
Tesla has bolstered its manufacturing capacity with new
factories in Berlin and near Austin, Texas, and Mr. Musk recently
tweeted that the company has plans to enter India next year.
The profit will likely revive debate about Tesla joining the
S&P 500 stock index. Tesla qualified for inclusion in the index
after reporting a profit in the second quarter this year, but was
left out in the latest update.
Write to Heather Somerville at Heather.Somerville@wsj.com
(END) Dow Jones Newswires
October 21, 2020 16:49 ET (20:49 GMT)
Copyright (c) 2020 Dow Jones & Company, Inc.
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