Tesla Inc. (NASDAQ: TSLA) has surprised many by turning a profit in the third quarter of $143 million after an uninspiring past few months. On Wednesday the company reported EPS of $1.86 which exceeded analysts’ forecasts of a loss of $0.24 per share in the quarter.
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Tesla says Shanghai factory ready for production
The electric carmaker is proving doubters wrong now that it has returned to profitability and managed to meet deadlines. The CEO of Tesla Elon Musk also delivered updates on the progress of their operations.
He said that the new factory they are building in Shanghai China has begun production already. Also, the company expects to launch the Model Y crossover early that expected in 2020 and their struggling energy segment has started to pick.
The company has said that the new factory in China will be cheaper relative to the assembly plant in Fremont California. Per unit capacity the company has said that the factory will be 65% cheaper to build compared to the production line in the US. Local production of their electric cars in China will enable Tesla to charge less for their vehicles by avoiding import costs.
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Impressive quarter a result of production efficiency
Tesla has attributed the impressive results in the third quarter to cost control efforts. The company indicated that since it began production of Model 3 this is the quarter they have had the lowest operating expenses. It equally indicated that they have enhanced the execution pace significantly as well as capital efficiency in their new production lines.
Despite posting revenue of $6.3 billion in the quarter the company still faces challenges. For the first time since 2012 quarterly revenue dropped and Tesla has reported profits in the past that it has failed to sustain.
Wedbush Securities analyst Dan Ives believes that the margins and profitability is a significant indicator for bulls. However, Tesla needs to maintain the levels as that could be a game-changer for them going forward. For now, things are good for Tesla as the balance sheet looks okay.
