Tesla on track to deliver 500,000 cars this year

Tesla on track to deliver 500,000 cars this year

People look at Tesla Model 3 cars at a showroom in Beijing on Wednesday. (AFP photo)
People look at Tesla Model 3 cars at a showroom in Beijing on Wednesday. (AFP photo)

Tesla Inc reported a fifth consecutive quarter of profits on Wednesday, handily beating analysts' estimates, and said it remained on track to deliver 500,000 cars in 2020 despite weaker sales in the rest of the global auto industry.

The earnings streak could add momentum for Tesla's inclusion in the S&P 500 Index and defies a downbeat trend among other automakers struggling to overcome a pandemic-induced slump.

The Palo Alto, California-based company reported third-quarter profit of 76 cents a share on an adjusted basis, surpassing analysts' consensus estimate for 55 cents a share.

Chief executive Officer Elon Musk, who has not always enjoyed earnings calls with analysts, praised his management team and basked in the bullish results.

"Q3 was our best quarter in history," he said on a conference call on Wednesday, ticking off a number of achievements, including production and delivery records and an all-time high free-cash flow.

Tesla's gross margins inched up more than 250 basis points in the quarter to 23.5%, while operating margins grew to 9.2% -- even after Musk received $290 million for hitting compensation targets.

Tesla said it would meet its goal of delivering half a million cars worldwide this year, a target it wavered on after last quarter's earnings and Musk last month hinted might not come to pass.

The company needs to deliver more than 181,000 cars in the last three months of the year to hit that mark, which would be a 30% jump over the previous quarter.

"While achieving this goal has become more difficult, delivering half a million vehicles in 2020 remains our target," Tesla said in a statement. "This will largely depend on increased production at its Shanghai factory and higher output of its Model Y.''

In January, before the onset of the coronavirus pandemic, Tesla predicted it would "comfortably exceed" deliveries of 500,000 vehicles for the full year, a 36% increase from 2019.

The company's likely double-digit growth stands out in a year when global auto-industry deliveries are projected to be 14% below pre-Covid estimates and down 22% from last year, according to LMC Automotive.

In addition to its mainstay Model 3 sedan and Model Y crossover, the company also manufactures the older and higher-priced Model X SUV and Model S sports sedan.

Its flagship factory in Fremont, California, now has capacity to make 590,000 vehicles a year: 500,000 3 and Y and 90,000 of the S and X.

Tesla said Wednesday deliveries of its Semi would start next year, four years after the big rig was first revealed.

And Musk said initial production of the company's new Cybertruck pickup was on schedule to begin in late 2021.

That batttery-powered truck will go head-to-head against General Motors Co's new electric Hummer and a pickup from Amazon.com Inc-backed Rivian Automotive Inc.

Tesla's revenue rose to a better-than-expected $8.8 billion in the third quarter, even as sales of regulatory credits to other automakers fell to $397 million. That was down from $428 million in the second quarter. 

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