Tesla, the electric vehicle and solar energy manufacturer, has hit a new milestone.
Tesla, whose CEO is Elon Musk, reported its fourth consecutive quarterly net profit for the first time. Tesla’s market valuation now far exceeds any other vehicle manufacturer.
The fourth straight quarterly profit means the company founded in July 2003 can be considered for inclusion in the S&P 500, the main US equity market benchmark.
Tesla, based in Fremont, California, reported a net profit of US$104 million in the quarter to June, which compared to a loss of US$408m 12 months earlier. In the unprecedented times of the coronavirus pandemic, it is a commendable achievement.
Musk defied the order to shut down its Fremont plant, calling it “fascist” and he eventually sued Alameda County, where Fremont is based.
A major part of the US$428 million in revenue recorded is the sale of regulatory credits — Tesla sells its zero-emission credits to other carmakers who need them to avoid penalties, Financial Times reported.
Total revenue was US$6.04 billion, about $1 billion higher than financial analysts forecasts and 5% less than a year ago.
Tesla, which has announced a site for its second vehicle manufacturing plant in the US, has seen its shares more than tripled since the start of the year. It has a factory in Shanghai, China, and is building a new manufacturing plant outside Berlin, Germany.
Earlier this month Musk reported that it delivered 90,650 vehicles in the second quarter, far ahead of forecasts for 74,130. While that represented a decline of about 5% from last year, other carmakers fared worse, with several reporting declines of more than 25%.
Tesla cited “fundamental operational improvements” for the strength of its quarterly results, adding that it had cut costs to counter losses incurred due to the coronavirus. Operating expenses were down 14% to US$940 million in the quarter.
“Our business has shown strong resilience during these unprecedented times,” Tesla said, adding the company generated positive free cash flow of US$418 million.
Musk said his company would have “full self-driving” vehicles by the end of this year and said each car in the fleet would “suddenly” become “five times more valuable, or something like that” as Tesla owners would be able to rent out their vehicles on a daily basis.