Tags: Tesla | SolarCity | electric car | automobile

Tesla Posts Surprise Profit as Musk Readies for SolarCity Merger

Tesla Posts Surprise Profit as Musk Readies for SolarCity Merger

 (Dreamstime)

Wednesday, 26 October 2016 06:38 PM

Tesla Motors Inc. reported a surprise profit, its first in eight quarters, just weeks after Chief Executive Officer Elon Musk urged employees to cut costs and deliver every car they could to boost results and prove Wall Street skeptics wrong.

Third-quarter profit excluding some items was 71 cents a share, the electric-car maker said Wednesday in a letter to shareholders. The forecast had been for a 54-cent a share loss in a survey of seven analysts that was complicated by changes in the way Tesla reports. The year-earlier loss was 58 cents. Tesla shares rose as much as 7 percent in late trading.

“The Tesla third-quarter results reflect strong company-wide execution in many areas," Musk wrote in the letter on the Palo Alto, California-based company’s website.

The results provide some vindication for Musk, who had pushed employees to improve performance ahead of a Nov. 17 shareholders vote on the proposed merger with SolarCity Corp. That deal has drawn criticism as a potential distraction as Tesla spends heavily to prepare its California factory for the high-volume Model 3 car and build out its Gigafactory battery plant in Nevada. Musk today lowered the expected spending on capital expenditures for 2016 to $1.8 billion, from $2.25 billion last quarter, to “focus on capital efficiency.”

Tesla also today maintained its forecast for 50,000 vehicles delivered in this year’s second half, after shipping 24,800 Model S sedans and Model X sport utility vehicles in the quarter, more than analysts had estimated.

Profitability Push

In an Aug. 29 e-mail, Musk told employees the third quarter would be their last chance to show investors that Tesla could be at least a little profitable and cash-flow positive before the Model 3 ramps up production. “We are on the razor’s edge of achieving a good Q3, but it requires building and delivering every car we possibly can, while simultaneously trimming any cost that isn’t critical, at least for the next 4.5 weeks,” he wrote at the time.

The Model 3, slated to begin at $35,000 before government incentives, is key to Tesla’s plan to expand to a wider market for its battery-powered autos. Enthusiasts stood in line at stores around the world to place $1,000 reservations for the Model 3 when it was revealed in late March. In May, Tesla said it had received roughly 373,000 pre-orders for the car, but has not updated that figure since.

Tesla continued to tout the benefits it expect from the combination with SolarCity. It plans to showcase a new solar-roof product and improved battery for home energy storage in Los Angeles on Friday night. The company also has said it will share more updates about the strategic plan for the combination and will provide more financial information Nov. 1.

 

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Tesla Motors Inc. reported a surprise profit, its first in eight quarters, just weeks after Chief Executive Officer Elon Musk urged employees to cut costs and deliver every car they could to boost results and prove Wall Street skeptics wrong.
Tesla, SolarCity, electric car, automobile
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2016-38-26
Wednesday, 26 October 2016 06:38 PM
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