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Tesla reports fourth straight quarter of profits,Defying Pandemic Shutdown

Expectations had been high following Tesla’s report that it had delivered slightly more than 90,000 vehicles in the second quarter

Tesla Inc., for the first time in its 17-year history, reported a fourth-consecutive profitable quarter, a milestone that is sure to bolster Chief Executive Elon Musk’s pitch that he can usher in the age of fully electric cars.

Defying the global coronavirus pandemic, threat of extended economic recession and Wall Street analysts who expected a loss, the Silicon Valley auto maker found a way, helped by the sale of regulatory tax credits, to eke out a $104 million profit in the second quarter.

On an adjusted basis, excluding stock-based compensation, the company said Wednesday it made $2.18 a share. Analysts surveyed by FactSet, on average, expected an adjusted loss of 2 cents a share earlier in the day, an estimate that narrowed from a loss of 14 cents on Monday and a much larger projected loss in May.

Shares soared more than 5% in after-hours trading in New York.

On the earnings call Wednesday, Musk announced that Tesla will build its next factory near Austin, Texas.

The company plans to dedicate its Fremont, California, car plant to the production of Model S and Model X vehicles for all markets, and for Model 3 and Model Y production for the Western half of North America.

The Texas factory, Musk said, will be used for production of the company’s Cybertruck, Semi, and Model 3 and Model Y vehicles for the Eastern half of North America.

“Tesla’s Gigafactory Texas will keep the Texas economy the strongest in the nation and will create thousands of jobs for hard-working Texans,” the state’s governor, Greg Abbott, said in a statement.

Texas had been competing with Tulsa, Oklahoma, to lure the factory. Travis county officials voted this month to give Tesla at least $14.7m in tax breaks, CNBC reported. Musk said the factory site, which is on the Colorado river, would be an “ecological paradise” that is “open to the public”.

Expectations had been high among Wall Street analysts, following Tesla’s report in early July that it had delivered slightly more than 90,000 vehicles in the second quarter, well above expectations.

Daniel Ives, an analyst with Wedbush, said that Tesla had “executed flawlessly” this quarter despite the global economic downturn due to Covid-19, specifically citing the company’s success in China.

Nicholas Hyett, an analyst with Hargreaves Lansdown, attributed the company’s success to “increasing sales in China, which look to be relatively higher margin thanks to the lower manufacturing costs, and increased recognition of software revenues”.

For years, Tesla’s stock price has defied gravity, even as it recorded massive losses and struggled to hit its production targets. The run of positive results will be seen as a vindication of Musk’s unconventional leadership, as well as its big bet on expanding in China.

Tesla’s recent success has come against the now-familiar backdrop of chaos related to its CEO, Musk.

The billionaire has been a major source of coronavirus misinformation throughout the pandemic, sharing false or misleading sources and engaging in a high-profile standoff with public health officials in northern California over lockdown restrictions, which affected the company’s only US car factory.


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