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Tesla Surprises Market With Q4 Profits, Its Second Straight Quarter Of Profit Ever


10/25/2019


Tesla Surprises Market With Q4 Profits, Its Second Straight Quarter Of Profit Ever
In a surprise announcement, United States based electric car maker Tesla announced a fourth quarter profit for 2018 at $139 million which is the first time that the company has managed to post two consecutive quarters of profits in the 15 years that it has been in operation.
 
According to an investor letter published on Wednesday, this is also the fourth quarter that ever that the company has clocked profits. During the quarter., Tesla also broke its record for revenues at $7.2 billion.
 
The company posted total 2018 revenues at $21.4 billion which is its highest for any year of operations even though the company notched up a loss of $1 billion for the entire year.
 
Despite this, the target of the company CEO Elon Musk of posting profits for an entire year still remains elusive. However analysts say that the copany has been scaling back its losses and had healthy cash in hand of $3.7 billion at the end of 2018 fiscal. The company had posted a loss of $2 billion in the previous year. In a letter to analysts and investors, Musk and CFO Deepak Ahuja said that 2018 was the “most pivotal year in Tesla’s history.”
 
Ahuja will be leaving the company in a “few” months. Musk announced on a call with analysts after the results.
 
“There is no good time to make this change,” Ahuja said on the call. “It’s a new chapter, a new year. Tesla has had two great quarters of profitability [and] cash flow, it’s on a really solid foundation.” Recently, the head of global finance and the chief accounting officer of the company had resigned. Ahuja’s role will be taken over by Zach Kirkhorn, vice president of finance at Tesla.
 
In 2018, Tesla manufactures a total of 253,000 cars, the company said earlier this month and delivered about 245,000 cars, 140,000 of those were Model 3s. In the fourth quarter of 2018 alone, the company delivered 63,359 Model 3s. While the company has been able to almost double the output of 2017 in 2018. Tesla only managed to reach half of the original 500,000-cars-sold goal that Musk once set for 2018.
 
The company however has started to operate at the kind of scale Musk has always promised about its Model 3 even though the company has taken two years to do so and spent billions in addition to production faults for months and ensuing delivery logistics issues. The company now expects to increase deliveries by 45 to 65 per cent in 2019 year on year at between 360,000 and 400,000 cars in total, Tesla said.
 
According to some analysts at Wall Street, there is a slowdown in demand in the United States for Tesla’s higher-priced variants of the Model 3. Warnings that Tesla might face a “demand air pocket” was issued by both Morgan Stanley and Deutsche Bank to investors while Goldman Sachs said that for Tesla the real question is to move forward with “sustainable demand”.
 
(Source:www.theverge.com)