Tesla Turns Another Profit As CFO Heads Out the Door

Tesla CEO Elon Musk waded through his company’s entire fourth-quarter earnings call before springing the news that two-time chief financial officer Deepak Ahuja is headed for retirement. It seems likely that Ahuja’s second retirement will be permanent.

Ahuja presided over a year Musk called the most challenging in Tesla’s history. Previous statements from the CEO suggested a second consecutive profitable quarter, and that’s just what Tesla announced last night: a $139.5 million profit in Q4 2018. That’s down from the previous quarter’s $311 million, but far and away better than Q4 2017’s $675 million loss.

It’s also a first for Tesla.

Never before has the company seen two profitable quarters line up next to each other, and with good reason. Before Q3 2018, the company’s list of profitable quarters held a single entry.

With Model 3s pouring out of Fremont at a steady clip, Tesla’s Q4 revenue of $7.23 billion beat analyst estimates, while its pile of available cash ($3.7 billion) continues to grow. It’ll need a chunk of that cash soon. The company has a $920 million convertible bond that matures in March, but Musk and Ahuja told investors the company is in a position to “comfortably” pay it off.

Forecasting deliveries in the 360,000 to 400,000 vehicle range for 2019, Musk said investors can expect profits going forward, with only Q1 2019 warranting a question mark. He also said that if the long-feared recession does appear this year, Tesla deliveries will still rise 50 percent. That said, this quarter’s Model 3 deliveries might fall in the U.S. as Tesla begins shipping the sedan overseas.

Speaking of overseas, the company’s Shanghai assembly plant will crank out 3,000 Model 3s per week by the middle of next year, Musk said. The Model Y, Tesla’s upcoming compact crossover, will appear by the end of 2020.

Tesla’s standard battery Model 3 — the $35,000 car promised by Musk during the model’s launch three years ago — should arrive this summer.

As the company cuts staff and rearranges trims and pricing, a new threat looms: competition. Tesla is no longer operating in a vacuum, and luxury automakers the world over are keen to beat the California company at its own game. Michael Dean, an analyst with Bloomberg Intelligence, commented that, “Tesla’s effective premium monopoly is also over with competition coming through in 2019 from Porsche, Audi and Mercedes.”

Edmunds analyst Jessica Caldwell said that, despite the bright points in its Q4 report, Tesla still faces an uphill climb.

“Things really aren’t going to get any better for Tesla in the U.S. than they did at the end of 2018,” she told CNBC. “Turning a profit, creatively addressing production challenges and getting the Model 3 to the masses were huge milestones, but keeping up this momentum is going to be virtually impossible.”

[Sources: Bloomberg, CNBC]