Tesla Takes $331 Million in 5th Consecutive Profitable Quarter

Matt Posky
by Matt Posky

Tesla continued to prove itself as the electric automaker par excellence by posting its fifth profitable quarter in a row on Wednesday. The California-based (for now) automaker reported a net income of $331 million and a 39 percent improvement in revenue to $8.8 billion.

Of course, a huge amount of that money came via regulatory credits Tesla sold to its rivals. By nature of being an EV manufacturer, the company was able to sell $397 million in environmental absolution while helping its own bottom line. Though third-quarter deliveries were quite strong as automotive revenue jumped 42 percent to $7.6 billion.

Tesla had sold 139,300 units by the start of October, the vast majority being the Model 3 sedan and Model Y crossover. By contrast, only 15,200 of quarterly deliveries went to the larger Model S and X. Assuming the company maintains its present momentum, it should get fairly close to its 2020 goal of delivering 500,000 cars by year’s end. But it noted that it would have to bolster production volumes in Shanghai and make some logistical improvements to its delivery network to actually hit the mark. Meanwhile, long-term concerns were a nonissue while capacity and customers continue to swell.

“We continue to see growing interest in our cars, storage and solar products and remain focused on cost-efficiency while growing capacity as quickly as possible,” Tesla explained to shareholders.

“We are increasingly focused on our next phase of growth,” it continued. “Our most recent capacity expansion investments are now stabilizing with Model 3 in Shanghai achieving its designed production rate and Model Y in Fremont expected to reach capacity-level production soon.”

Looking at the next batch of hurdles, Tesla needs to finish constructing facilities in Germany and Texas — the latter of which will serve as home base for Cybertruck. Elon Musk recently said the electric pickup is supposed to begin deliveries late in 2021.

It’s also working on fine-tuning autonomous-driving capabilities it has been promising for ages and is supposed to be made available via over-the-air updates on all modern vehicles — even vintage examples of the Model S (assuming the owner splurged on the applicable packages). For now, all the company has been willing to promise an Autopilot update on a limited number of test vehicles that will be issued more broadly before the new year.

We’re skeptical of any automaker promising true autonomy, frankly. Tesla has also habitually over-promised in regard to Autopilot, despite having one of the better advanced driving suites on the market. It has also started taking heat from the public and safety regulatory agencies for misrepresenting the very real limitations of Autopilot. But that has not resulted in a net negative for the brand. Most people still view it as the automaker occupying the bleeding edge of the electric revolution and rightly so. For all its foibles, Tesla is the one brand that has made EVs work for both itself and its increasingly loyal customer base.

[Image: Jag_cz/Shutterstock]

Matt Posky
Matt Posky

A staunch consumer advocate tracking industry trends and regulation. Before joining TTAC, Matt spent a decade working for marketing and research firms based in NYC. Clients included several of the world’s largest automakers, global tire brands, and aftermarket part suppliers. Dissatisfied with the corporate world and resentful of having to wear suits everyday, he pivoted to writing about cars. Since then, that man has become an ardent supporter of the right-to-repair movement, been interviewed on the auto industry by national radio broadcasts, driven more rental cars than anyone ever should, participated in amateur rallying events, and received the requisite minimum training as sanctioned by the SCCA. Handy with a wrench, Matt grew up surrounded by Detroit auto workers and managed to get a pizza delivery job before he was legally eligible. He later found himself driving box trucks through Manhattan, guaranteeing future sympathy for actual truckers. He continues to conduct research pertaining to the automotive sector as an independent contractor and has since moved back to his native Michigan, closer to where the cars are born. A contrarian, Matt claims to prefer understeer — stating that front and all-wheel drive vehicles cater best to his driving style.

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  • JGlanton JGlanton on Oct 23, 2020

    Its worse than that. most of Tesla's carbon credit sales are still in A/R, so they haven't really even sold them yet. They just have promises to buy them. "Stated differently, half of 1Q20, and all of TSLA's 2Q20 regulatory credit revenues are still in accounts receivable ("A/R"). So what's the big deal? Well, we interpret this as one of two things, namely: (1) TSLA sent a regulatory credit invoice to a customer and claimed it as revenue up-front (i.e., we'll give you a price break on the regulatory credits you are buying, and let you pay us at a later date when the credits are actually needed, if you "buy" the credits now - such a transaction would create a receivable)... Johnson's conclusion post-earnings is that Tesla may have "pulled forward cashless/one-time regulatory credit sales based on cars Tesla may not have sold to people who have not paid for them, enabling 'goal-sought' 100% gross-margin 'paper' sales in order to be included in the S&P 500." "We see this quarter's earnings as among the lowest in TSLA's history," he concluded. https://www.zerohedge.com/markets/gordon-johnson-tesla-engaged-accounting-games-make-their-q2-profit

  • JGlanton JGlanton on Oct 23, 2020

    "Tesla's latest credit fire sale is a repeat of Q2 when it sold a record $428M credits to show a $104M profit. Thus, over the past two quarters, Tesla has reported a combined net income of $435M. Stripping out credit sales, that profit turns to a loss of $390M."

  • 3-On-The-Tree Lou_BCsame here I grew up on 2-stroke dirt bikes had a 1985 Yamaha IT200 2-strokes then a 1977 Suzuki GT750 2-stroke 750 streetike fast forward to 2002 as a young flight school Lieutenant I bought a 2002 suzuki Hayabusa 1300 up in Huntsville Alabama. Still have that bike.
  • Milton Rented one for about a month. Very solid EV. Not as fun as my Polestar, but for a go to family car, solid. Practical EV ownership is only made possible with a home charger.
  • J Love mine, but the steering wheel blocks dashboard a bit, can't see turn signals nor headlights icons. They could use the upper corners of the screen for the turn signals. Mileage is much lower than shown too, disappointing
  • Aja8888 NO!
  • OrpheusSail I once did. My first four cars were American made, and through an odd set of circumstances surrounding a divorce, I wound up with a '95 Nissan Maxima which was fourteen years old and had about 150,000 miles on it.It was drove better, had an amazing engine, and was more reliable than any of my American cars. This included a new '95 GMC pickup that went through five alternators in under two years while the dealership insisted that there was no underlying electrical problem while they tried to run the clock on the warranty.That was the end of 'buy American'. I've bought from Honda and VW since, and I'll consider just about anything except American now.