News that will shock some pundits and vindicate others, Tesla just announced it made a profit in the third-quarter of 2018.
The builder of all-electric vehicles reported $312 million in net income, the first time it’s made money in two years. Its popular Model 3 sedan appears to have saved the day, helping double the automaker’s revenue.
Record deliveries of this battery-powered sedan have energized Tesla’s financials thanks to its gross margins of nearly 20 percent. Free cash flow clocked in at $881 million with the company ending the quarter with $3 billion in the bank.
In comparison, this troubled automaker lost nearly $620 million in third quarter of 2017. In the previous quarter of this year, it burned through just shy of $718 million.
Fueling its positive financial performance, Tesla built more than 5,300 Model 3 sedans in the last week of the third quarter. Further production efficiencies have reduced the time it takes to assemble one of these cars by around 30 percent.
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Customers took delivery of more than 56,000 Model 3s in the third quarter of 2018. Nearly 28,000 examples of the Model S sedan and Model X crossover were sold in the same time period.
In August of 2017 the company reported some 455,000 Model 3s had been ordered. Despite long delays, fewer than 20 percent of these have been canceled by would-be customers. New financing plans, more affordable versions of the car and the beginning of sales in countries located outside the Americas, in addition, of course, to increased production should further drive sales of this car.
Wall Street appears to be happy with this quarter’s financial performance. Tesla’s stock price has jumped more than 11 percent in after-hours trading even though it dropped nearly 2 percent during the day. Currently, the stock price is hovering around $322.
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