Tesla Motors Inc. posted $22 million profit in its latest period with record sales of its electric cars ahead of the release of its mass-market sedan. This profit is the electric car company’s first after 12 consecutive quarterly losses.
As it prepares to ramp up annual production from 50,000 cars in 2015 to 500,000 cars in 2018, Tesla has collected more revenue than ever with improved improved sales of the Model S sedan and Model X sport-utility vehicle, a reduction in spending, and a boost from selling tax credits.
Gross profit from the tax credits rose to $139 million from $39 million a year ago though Tesla expects “negligible” sales of them in the fourth quarter implying that they will not be a reliable source of income for the future. Given that a large number of car makers are expected to bring out competing electric car models, it is unsurprising that they would buy fewer credits from Tesla.
Tesla’s revenue increased to $2.3 billion from $937 million last year. Tesla also said it held $3.1 billion in cash in September. Analysts expect Tesla will need about $2.5 billion through the end of 2017 for the Model 3 rollout and the completion of its battery factory in Nevada.
The company surpassed CEO Elon Musk’s profitability goal and analyst expectations, reporting earnings per share of $0.14. Tesla also delivered a record number of cars in the third quarter and is on-track to meet its full-year target. It even reported positive free cash flow, defined as operating cash flow less capital spending, for the first time since 2013.
Of course, one good quarter doesn’t ensure that Tesla Motors can deliver on its ambitious goal. With a massive hike in production volume on the way, Tesla will have to shake off a reputation for missing its self-imposed production deadlines.