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Tesla Reports Third Straight Quarter Of Profits; Elon Musk Calls Virus Lockdowns 'Fascist'

Tesla Reports Third Straight Quarter Of Profits; Elon Musk Calls Virus Lockdowns 'Fascist'
The sweeping stay-at-home restrictions imposed in the United States in order to prevent the spread of the coronavirus pandemic was called "fascist" by the outspoken CEO of Tesla Inc Elon Musk even as the electric vehicle maker posted its third consecutive quarter of profits.
Those comments by the Tesla chief apparently overshadowed the achievement of the company of making profits for the third consecutive quarter which apparently surprised many investors because most of the other major auto makers were hit hard by the coronavirus pandemic ravaging through the world which reduced consumer demand and resulted in factory closures by the restrictive orders of various governments.
The quarterly results propped up the shares of the company by 8.8 per cent at $871 a share.
The profit making quarter for Tesla was unusual because a day ago, the Detroit-based rival Ford Motor Co announced a first quarter loss of $2 billion while also forecasting a loss of about $5 billion for the current quarter because of the demand shock caused by the coronavirus pandemic globally.
The pandemic related crisis also forced another American car maker General Motors Co to announce suspension of its dividend and share buybacks on Monday and said that it will reports first quarter results on May 6.
The durability of Tesla will be tested in the manner in which the company performs in the current quarter as well as for the remainder of the year.  The company will be well placed to take away market share from its rivals in the electric car segment as well as compete with legacy car makers for market share in an environment of declining car sale because of coronavirus pandemic if it manages to limit its losses and even continue to make profit throughout the year thereby outperforming the legacy automakers.
While manufacturing just a fraction of the number of cars that some of its conventional auto making rivals produce, the stock market value of Tesla is much larger because of the very high expectations that investors have form the company for in the future.
The government-ordered shutdown of its factory in Fremont, California, has been one of the biggest disruptions to Tesla during the quarter. The factory has been temporarily shut down because of the coronavirus pandemic crisis since March 24 and the stay at home orders will run till at least May 31.
Calling the state imposed stay-at-home order a "serious risk" to the business, Musk said that he had no idea of resumption of production in California, while talking to analysis on a conference call on Wednesday.
"To say that they cannot leave their house and they will be arrested if they do, this is fascist. This is not democratic, this is not freedom. Give people back their goddamn freedom!" Musk said.
While initially tweeting that "the coronavirus panic is dumb" on March 6, Musk later decided to offer supplying hospitals with free ventilators.
It was not clear when vehicle manufacturing globally could begin and when there will be normalization of global supply chains, Tesla said, and hence added that it would review its full-year guidance for net income and cash flow at the time of the reporting of performance for the current quarter.

Christopher J. Mitchell

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