Tesla Inc overcame a seven-week pandemic-related shutdown at its California assembly plant to post a surprising US$104 million net profit for the second quarter.
It was the electric vehicle and solar panel maker’s fourth-straight profitable quarter, qualifying it to be included in the S&P 500 index of corporate titans. That decision would be made later.
Local government restrictions forced Tesla to close its only US assembly factory in Fremont, California, from March 23 to May 11.
Photo: AP
Even with no production, the company paid about 10,000 workers for part of the shutdown and Tesla continued healthcare and other benefits.
The profit, compared with a US$408 million loss a year earlier, pushed Tesla’s shares up 5.7 percent to US$1,682.99 in after-hours trading on Wednesday.
The company likely would have lost money without US$428 million it earned from selling electric vehicle credits to other automakers so they can meet government fuel economy and pollution regulations.
Chief financial officer Zachary Kirkhorn said he expects money from the credits to double this year over the US$594 million the company made last year, but said Tesla is not managing its business assuming that credits would contribute significantly.
The company is counting on manufacturing efficiencies to increase profits, he said.
Also on Wednesday, Tesla said it has picked the Austin, Texas, area as the site for its second US assembly plant.
Austin was the front-runner, but the company was also considering Tulsa, Oklahoma.
On a conference call with analysts and investors, CEO Elon Musk said that would build a compact vehicle and a higher-capacity passenger vehicle, but he did not give a time frame.
He said Tesla is on its way to making vehicles more affordable through manufacturing and design efficiencies.
“The thing that bugs me the most about where we are right now is that our cars are not affordable enough,” he said.
Musk also said he is confident about rolling out full self-driving technology by the end of the year and said it already works well during his drives to work.
Excluding one-time items such as US$347 million in stock-based compensation, Tesla made US$2.18 per share. That beat Wall Street estimates of a break-even quarter, FactSet data showed.
Revenue was down 4.9 percent from a year earlier to US$6.04 billion. That still beat estimates of US$5.15 billion.
Most of that stock compensation went to Musk, who earned a payout of about US$700 million in May and on Tuesday became eligible for another US$2.1 billion, all based largely on Tesla’s fourfold stock price growth this year.
However, Tesla issued a note of caution in its investor letter released on Wednesday after the markets closed.
“It remains difficult to predict whether there will be further operational interruptions or how global consumer sentiment will evolve in the second half of 2020,” it said.
Musk also said that demand for Tesla’s vehicles is not a problem, but the company is facing struggles with its parts supply chain.
Tesla’s second-quarter profit came after it announced better-than-expected global sales during the period.
The company said it delivered 90,650 vehicles from April through last month, as it rolled out the new Model Y SUV in the US and China.
That is a 2.5 percent increase over the first quarter’s 88,400 vehicles delivered, but was a 4.8 percent drop from the second quarter of last year.
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