Tesla, Elon Musk report ‘historic’ $312 million Q3 profit

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Tesla produced more than 5,300 Model 3's at its plant in Fremont, California in the last week of the quarter. Photo credit: BLOOMBERG

UPDATED: 24/24/18 21:55 ET – adds Musk comment

Tesla reported net profit of $ 312 million for the third quarter, the first GAAP gain in two years, when revenue doubled amid the rising production of the Model 3 sedan.

The company recorded a net loss of $ 619.4 million in the same quarter last year and a net loss of $ 717.5 million in the second quarter of this year, the company said Wednesday.

Record deliveries of the company's Model 3 sedan with gross margins of nearly 20 percent resulted in free cash flow of $ 881 million and the company ended the quarter with $ 3 billion in cash at hand. Car sales nearly doubled to $ 6.1 billion from $ 3.36 billion in the second quarter; it was $ 2.4 billion in the same quarter last year. Tesla also strengthened the positive results with $ 52 million from the sale of taxation schemes and $ 23 million on other revenues.

On the balance sheet, the creditors increased from over the second quarter by more than $ 566 million to $ 3.6 billion, after Tesla asked suppliers to reduce retroactive costs. Tesla said that the receivables increase by a "comparable size" to $ 1.15 billion.

CEO Elon Musk, who has often set goals and deadlines that Tesla has not achieved, surprised the investors by keeping his promise to make Tesla profitable only in the 15th quarter, which marks a positive end for a difficult quarter for Tesla. the CEO whose leadership was openly debated only weeks ago.

"We can be really cash-flow-positive and profitable in all future quarters," Musk said. He qualified that he excluded those who had to pay a large debt payment, as in the first quarter of 2019.

Musk reiterated that Tesla does not currently intend to increase equity or debt.

Tesla produced over 5,300 Model 3s in the last week of the quarter. According to the company, the number of hours for the production of each model 3 dropped by more than 30 percent, because the production levels stabilized after a difficult run that started in June 2017. A total of 56,065 Model 3's were delivered to customers in the quarter. Despite logistical challenges, Musk blamed a shortage of car carriers. The company delivered 27,710 Model S and Model X vehicles during the quarter. Despite these challenges, Tesla's operating expenses fell by $ 133 million, as Tesla owners volunteered across the country to help the company deliver vehicles during the last two weekends of the quarter.

Less than 20 percent of the 455,000 Model 3 orders that the company reported in August 2017 have been canceled, Tesla said. The company expects to convert most of its remaining reservations into orders because it will roll out cheaper versions of Model 3, introduce new financing options and start deliveries to markets outside of North America. Tesla expects the average sales price of Model 3 to fall as this happens, but reaffirmed its guidance on profitability and positive cash flow in the fourth quarter.

Tesla's stock rose by more than 11% to $ 323 in trading after closing, after closing regular trading hours by nearly 2 percent.

Less than 20 percent of the 455,000 Model 3 orders that the company reported in August 2017 have been canceled, Tesla said. The company expects to convert most of its remaining reservations into orders because it will roll out cheaper versions of Model 3, introduce new financing options and start deliveries to markets outside of North America. Tesla expects the average sales price of the Model 3 to fall as it does, but confirmed its guidance on profitability in the fourth quarter.

Reuters contributed to this report.