Tesla Profits $22 Million in Q3, Doesn’t Need Extra Cash for Model 3

For the second time since going public in 2010, Tesla has posted a quarterly profit. In its third quarter earnings report, the automaker recorded net income of nearly $22 million. In a conference call, Tesla CEO Elon Musk called the past three months the company’s “best quarter ever.” Perhaps more interestingly, Tesla says it does not need to raise any extra capital to build the Model 3.

“Our current plan does not require any capital raise for Model 3 at all,” Musk said during the Q&A portion of the conference call. He did say that doesn’t necessarily mean Tesla won’t raise capital for unforeseen costs and to decrease risks to the company, however. The automaker previously told investors that it would likely raise capital this year in order to finance its latest model, which will start at $35,000 and arrive in late 2017. But with these Q3 results, Tesla asserts that it has the money it needs.

Selling zero-emission vehicle credits helped the automaker get into the black. Tesla made $139 million by selling ZEV credits to other automakers. Those credits, which Tesla has in abundance because it only produces electric cars, can be purchased by other car companies to offset the less eco-friendly models in their lineups and meet Corporate Average Fuel Economy requirements. Tesla sold far more ZEV credits in Q3 than it did in any other quarter.

Total revenue from automotive sales, services, and other sources in Q3 was $2.3 billion, up significantly from the $936 million earned during the same period last year. However, costs and operating expenses whittled that down to a net income of $21.9 million. Tesla paid off a $600 million debt and ended the quarter with $3.1 billion in cash. The company says it achieved record production levels in Q3, rising 37 percent from Q2 and 92 percent from Q3 2015 to 25,185 units. Of those, 24,821 were delivered to customers in the quarter, 300 more than the company estimated at the beginning of the month. There were rumors that the sales increase was due to widespread discounting, but Musk said those allegations are “absolutely false.”

Musk said Tesla’s planned merger with SolarCity will be neutral but could generate some cash in the fourth quarter. Tesla stockholders will vote on the acquisition on November 17. The earnings report comes on the heels of Tesla’s announcement of Autopilot Hardware 2, which will come standard on all Tesla models, including Model 3, and will be capable of Level 5 fully autonomous driving once regulations allow. Model 3 is on track to begin production and deliveries in the second half of 2017. In an update on its website, Tesla said new Model 3 orders wouldn’t be delivered until mid-2018 or later—not surprising considering Tesla has nearly 375,000 preorders to fill once production starts. Musk has promised to boost production to 500,000 cars a year by 2018, a five-fold increase from its current pace.

Source: Tesla, Reuters

 

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