Tesla reported its first quarterly net profit in over three years on Wednesday, helped by almost $139 million in clean car credit sales. Elon Musk, tech billionaire and chief executive of Tesla, said the automaker could turn another profit in the fourth quarter. Further, the U.S.-based automaker indicated that it has substantially decreased the costs for production of its Model 3 sedan in 2017.
One profits answers many questions
Tesla’s numbers were raised by $139 million in sales of California zero-emission vehicle credits. Analyst Colin Langan of UBS, who had predicted a profit, wrote that the $139 million in ZEV credits of were way above the $30 million he had estimated.
In late trading Wednesday, this profit pushed Tesla’s shares upmore than 4% after they dropped 16% this year. In addition, the profit provided welcome vindication for Musk, who pushed workers via an August email to deliver every car possible, cut costs and drive the company’s results into the positive, noted Bloomberg.
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In the same email, Musk wrote, “It would be awesome to throw a pie in the face of all the naysayers on Wall Street.”
This profit also counters skeptics who have questioned his big plans for combining SolarCity and Tesla into a company that offers roof-to-garage no-carbon energy systems.
No more capital needed for Model 3
Musk told analysts that Tesla’s current plan does not require any capital for the high-volume Model 3 at all. The electric car maker could still raise capital to account for uncertainty and de-risk the business, however, he added. If Musk does seek to tap the markets for money, then a leaner capital spending plan and the third-quarter profit could assist in greasing the wheels, says Reuters.
Previously, the automaker told investors that it expected to raise capital this year to fund the launch of the Model 3, which will need a substantial investment in product development and machinery. However, Musk recently indicated in a tweet that they no longer need to raise capital. Of the $1.8 billion in capital spending planned for the year, about $1 billion of the outlay is coming in the fourth quarter, said the EV firm. But the new overall capital spending forecast is around 20% lower this year than the previous forecast of $2.25 billion.
In premarket trading, Tesla shares were up almost 5%. Year to date, the stock is down more than 15%, while in the last year, it is down more than 3%. The stock has a 52-week high of $269.34 and a 52-week low of $141.05.