New York
UJ Business
—
Tesla’s challenging quarter concluded with impressive sales figures.
The company successfully delivered 83,500 vehicles in the third quarter, a robust showing that should alleviate investor apprehensions regarding logistical challenges and an impending cash flow crisis. This total included nearly 56,000 of the more affordable Model 3.
Production fell slightly short of that figure, with Tesla reporting approximately 53,000 Model 3 units built. However, this was still within the company’s expected range.
Just three months prior, the automaker found it challenging to produce 5,000 Model 3s in a week, a target that had been delayed. Although Tesla did not sustain that production rate, it remained sufficient to keep the company on course for its first consistent profit.
Tesla was in desperate need of positive news.
In August, CEO Elon Musk proposed, then quickly retracted, plans to take the company private. The SEC filed a lawsuit against Musk last week, alleging he misled investors by stating in a tweet that he had secured financing for this move.
On Saturday, the penultimate day of the quarter, Musk reached an agreement with the SEC to pay a $20 million fine and relinquished his role as chairman of Tesla, although he will continue as CEO, a development that reassured investors on Monday.
There have also been several executive departures recently, including the chief accounting officer, who resigned after only a short tenure.
Following the production and sales announcement, Tesla (TSLA) stock fell approximately 3%.
Tesla plans to disclose its revenue and profit figures later in the quarter. The report did not specify the expected numbers, but indicated that all Model 3s sold at the end of the quarter were the pricier all-wheel-drive versions featuring dual electric motors.
Musk also communicated to Tesla employees over the weekend that the company was nearing its profitability goal.
“We are on the verge of achieving profitability and disproving the skeptics, but we need to execute exceptionally well tomorrow (Sunday),” he stated, alluding to the quarter’s final day. “If we give it our all tomorrow, we will achieve an extraordinary victory that exceeds all expectations.”
In its decade-long history, the company has only recorded two quarters of modest profitability, racking up a cumulative loss of $6 billion.
Tesla faces $1.2 billion in debt maturing within the next six months, prompting some analysts to suggest the necessity of raising additional funds through share sales or new debt issuance.
Musk believes that revenue from car sales will provide the necessary cash flow for Tesla. However, he has also acknowledged challenges related to delivering vehicles, which has heightened investor anxiety about potential cash shortages.
“Sorry, we’ve transitioned from production hell to delivery logistics hell,” Musk tweeted two weeks ago in response to a customer asking about the delivery of their promised vehicle. “This issue is much easier to handle,” he added. “We are making significant progress.”
