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'Historic' Quarterly Profit For Tesla, Looks To Enter Europe And China

'Historic' Quarterly Profit For Tesla, Looks To Enter Europe And China
Tesla is now looking beyond the US market for sale of its electric cars after the company made a surprise and historic profit for the third quarter of the current year driven by increased demand for its least costly Model 3.
According to the statement from Tesla chief Elon Musk, the company is on track to remain profitable from now on. The words form the billionaire entrepreneur’s these words were seen as an attempt to placate   fears surrounding his sometimes erratic behaviour especially on Twitter, the debts piled up by the company and the shortfall in meeting self imposed production targets.
He expected to manufacture mode of the Model 3 vehicles in the current quarter and be able to start delivering the vehicles to customers in Europe and China starting early next year, Musk said.
"I am incredibly excited about what lies ahead," Musk said in an earnings call with analysts.
For the quarter that ended September 30, the revenues of the company for the third quarter more than doubled year-on-year at $6.8 billion, resulting in a net income of $311.5 million.
The third quarter results clearly beat estimates of analysts by a quite a margin for the quarter.
There was an increase of 9.8 per cent in the shares of the company at $316.80 in after-market trades after the release of the historic profits.
A loss of $619 million was reported by the company for the same period a year ago.
"Q3 2018 was a truly historic quarter for Tesla," said Musk, who also heads SpaceX. "Model 3 was the best-selling car in the US in terms of revenue and the 5th best-selling car in terms of volume."
During the last quarter, an average of 4,300 cars a week was churned out by the assembly line of Tesla which is close to a self imposed production target of Musk. 
According to Musk, the company has also increased its operational efficiency for the Model 3 with a gross margin at more than 20 per cent. Musk believes that the company would continue to stay profitable even though it would still be using up cash to pay off debts.
"Model 3 is attracting customers of both premium and non-premium brands, making it a truly mainstream product," Musk said. He added that Tesla's "earnings profile has flipped dramatically."
Most of the Model 3 cars that the company sold in the last quarter were of the non-premium type and had a starting price of lower than $35,000.
"For many people, it is the most expensive car they ever bought," Musk said. "They are demonstrating they are willing to spend more money for a Tesla."
According to the company, customers in Europe would be delivered the first Model 3 vehicles by the first quarter of next year and those in China by the second quarter.,
While the initial production for these export oriented models would be in California, US, the company is however "moving rapidly" to start off manufacturing in China. Musk said that Tesla wants to start China production by next year.
"We will also have a factory in Europe long term, because it is pretty silly to make cars in California and ship them to Europe," Musk said.

Christopher J. Mitchell

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