Tesla Motors Company became profitable

Tesla Motors Company became profitable

Tesla Motors became profitable for the first time in 2 years

Tesla published its financial results for the third quarter of 2018. Previously, CEO Elon Musk stated his hopes that the organization would become profitable in the third or fourth quarter. But, as it turned out, the Company didn’t even have to expect.

In December 2018, Tesla Motors announced its record income of US$ 6.8 billion, which is equivalent to a profit of US$ 300 million or US$ 2.90 per share. However, it is worth noting that the corporation still has a chance that the profits may be short-lived.

Although Musk stressed that at present Tesla does not need to raise additional funds. Currently, the car manufacturer’s debt is about US$ 2.2 billion, which should be paid by November 2019. It was to be hoped that payments to liquidate that debt would be able to offset future quarterly profits.

Speaking of this, Model 3 gross margin became positive in the second quarter, and in the third quarter the situation looks even better. Tesla reported that the margin on GAAP and not GAAP exceeded 20%. The company needs to have a high margin level and this means Tesla makes more money from every car sold.

Model 3 is extremely important for the Company so far. In the third quarter, Tesla reported that a total of 55,840 models were sold, which is three times the number of deliveries of Model S or Model X.

Expectations of Tesla Motors

The corporation has great expectations about Q4. The Company hopes to increase production and supply of Model 3 in the fourth quarter, as well as sales of more than 100,000 Model S and Model X cars by the end of the year. According to analysts, the margin for Model 3 will remain at the same level as at present, despite the reduction in tariff costs for components supplied from China.

Anyway, it was a troubled quarter for Tesla. In 2018, Elon Musk wrote on Twitter that he decided to turn the Company into a public organization. That eventually attracted the attention of the SEC, which then sued the CEO of the corporation and demanded his resignation. Both sides agreed:  both Tesla and Musk paid US$ 20 million each. In addition, he relinquished his post as Chairman of the Board of Directors, although he remained CEO of the Company.