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Tesla reported a net loss of US$717.54 million for the second quarter, an increase on both a quarterly and annual basis, but the company’s stock climbed up on the news that the Model 3 has started making money.
Indeed, in revenues Tesla reported US$4 billion for the second quarter of the year, up from US$3.41 billion for the first quarter and US$2.79 billion for the second quarter of 2017. Sales of the Model 3 after the urgent ramp-up of production contributed to this revenue increase, with the company reporting “dramatic reductions in manufacturing costs”.
Also, the gross margin on the Model 3—the car that is planned to turn Tesla into a mainstream carmaker—turned “slightly positive” during the second quarter, which helped the overall results and marked another step along the way to mainstreamness for the luxury EV maker.
The company also reported another quarter of negative cash flow, but according to CEO Elon Musk, Tesla expects to turn cash-positive this quarter as it maintains a production rate of 5,000 Model 3s weekly. What’s more, Musk told investors that Tesla could even turn in a profit this quarter.
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This is not the first time that the CEO has made this promise, and no investor would be blamed if they treated it with some skepticism, but judging by the stock performance of Tesla after the announcement of the second-quarter results, investors in the company are ready to take any straw Musk gives them to stay on board with the company.
Despite analyst warnings that Tesla will crash and burn before the year’s end, Musk is confident that the company will actually report profits for both the third and the fourth quarter of 2018 and reiterated that there was no need to raise more funds, again contrary to analyst forecasts that Tesla needs an urgent equity injection. On the contrary, according to Musk, Tesla is now in a position comfortable enough to start repaying debts.
By Irina Slav for Oilprice.com
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Irina is a writer for Oilprice.com with over a decade of experience writing on the oil and gas industry.