The profit turnaround comes after a stormy period for the US auto firm, after company CEO Elon Musk stepped down as company chairman amid a scandal where he was accused of defrauding investors and others questioning his ability to compete with other companies entering the electric vehicles (EV) market such as BMW, Nissan, Toyota and others.
US automaker Tesla Inc shocked investors after company stocks skyrocketed 21 percent, following news that CEO Elon Musk promised to rollout a cheaper SUV model and launch several autonomous driving technologies aimed at competing with rival companies in the electric market, it was revealed on Wednesday.
Tesla’s stocks climbed roughly to $301.12 hours after the news broke, surpassing $300 for the first time since the beginning of March, and increased its cash balance to $5.3bn as well as saw profits rise $1.86 per share, despite analyst forcasts of a mere 42 cents per share.
The automaker said that it was “highly confident” it would exceed the low end of its annual vehicle delivery goal in the global auto market, adding that it still needed to show it could remain profitable as Model 3 sedans were set for production at its new Gigafactory in Shanghai.
Both Model 3 and Model Y production remained ahead of schedule, with the Y forcasted to launch by summer 2020, the company said in a press release.
The news comes after Tesla launched a further Gigafactory in Europe, with a location expected in Germany, as well a several truck models, including an all-electric lorry. A new model Tesla Roadster is also underway as well as new software updates deployed in late September.
Speaking on the matter, Mr Musk said: “For about a year and a half we stripped Tesla energy of resources. Now that Model 3 production is in a good place and headed to a great place we have restored resources to Tesla storage and solar. That’s going to be really crazy growth.
Zach Kirkhorn, Tesla’s chief financial officer, said the he expects margins to grow more for the Model Y than Model 3, despite production costs remaining the same between the two models.
News of the stock price surge helped the troubled automaker to reduce its year-to-date losses to 8 percent and boost its market capitalisation to $9bn, in addition to exceeding the CEO’s expectations that the company would finally break even in July in the third quarter, as well as turn a profit by late 2019.
Tesla also hopes to deliver 360,000 to 400,000 units in 2019, stating that it was “highly confident in exceeding 360,000 deliveries this year”.
The carmaker’s first Gigafactory was revealed in 2016, initially as a ‘tent’ production facility in the Nevada desert, but later ventured into China to help increase manufacturing across the Asia-Pacific, as well as circumvent sanctions and tariff schemes from the Trump administration amid the US trade war against China.
Further problems were found after the US Federal Bureau of Investigation launched a probe against Mr Musk over allegations that he had deceived company investors, in addition to US president Donal Trump culling $7,500 in federal tax credits to EV buyers in a bid to phase out the incentive, causing excess overstock in the company’s US inventories.