By Akanksha Rana and Tina Bellon
(Reuters) – Tesla Inc posted a second-quarter profit on Wednesday as cost cuts and heavy deliveries helped offset coronavirus-related factory closings, raising shares by 4.4% in operations outside business hours and removed an obstacle that could lead to the manufacture of electric cars. inclusion in the S&P 500 index.
Tesla said it posted net income of $ 104 million from April to June, or $ 0.50 per share, marking the first time the company has posted a profit for four consecutive quarters, a condition for it to be considered for the stock market index. largest American companies. . (See graphic: https://tmsnrt.rs/3hw2RwV)
Performance is a major achievement for Chief Executive Elon Musk, whose mission to lead the global auto industry toward an electric future has been frequently questioned by investors who doubted Tesla’s viability.
Its shares have gained more than 500% in the past year. Many analysts believe the recovery has been driven in part by expectations of Tesla’s impending listing on the stock index, sparking an avalanche of stock demand.
Musk in a conference call on Wednesday said Tesla would prioritize growth over profit going forward and focus on making its vehicles more affordable.
“What bothers me the most right now is that our cars are not affordable enough, we have to fix that,” Musk said on the call. “I think we just want to be a little bit profitable and maximize growth and make cars as affordable as possible.”
The price of a Model 3 sedan, its most popular vehicle, starts at $ 37,990 in the United States.
Musk also announced that Travis County, Texas, which includes Austin, would be the site of the new Tesla factory. The area had been competing with Tulsa, Oklahoma, for the new plant, which promises to create at least 5,000 jobs.
Musk said the factory would produce Model 3 and Model Y vehicles for the eastern United States, as well as a new semi truck called the Tesla Semi and the automaker’s futuristic Cybertruck.
Tesla on Wednesday affirmed its goal of delivering at least half a million vehicles by the end of 2020 despite production disruptions, including the closure of its California factory for nearly six weeks of the quarter by order of local authorities. The company delivered more than 90,000 vehicles in the second quarter, exceeding analyst expectations.
“While achieving this goal has become more difficult, delivering our half a million vehicles by 2020 remains our goal,” the company said.
Musk said in Wednesday’s call that Tesla’s real constraint to growth is the production of battery cells at an affordable price, and said the company would expand its business with Panasonic Corp and Contemporary Amperex Technology (CATL) of China.
Tesla will introduce new low-cost, long-lasting batteries in its Model 3 sedan in China later this year or early next year, Reuters previously reported.
Tesla’s second-quarter revenue fell to $ 6.04 billion from $ 6.35 billion a year ago, but exceeded revenue analysts’ expectations of $ 5.37 billion, according to IBES data from Refinitiv.
Tesla reported $ 5.18 billion in automotive revenue in the second quarter, but its share of regulatory loan revenue, payments the company receives from other automakers to offset emissions, increased to $ 428 million from $ 354 million in the first trimester.
Those revenues could be depleted as more manufacturers develop and sell electric cars, but many rivals are still focused on reaping the high profit margins for fuel-efficient trucks and SUVs.
“Right now in the electric vehicle market, it’s Tesla’s world and everyone else is paying the rent, a dynamic that shows up front and center this quarter,” said Dan Ives, analyst at Wedbush, in a note. .
Tesla’s rapid rise to become the world’s most valuable automaker could usher in a new era for the global auto industry, defined by a Silicon Valley software approach that is surpassing old-school manufacturing insights .
The company said the increased revenue from those regulatory credits combined with temporary pay cuts for employees during the pandemic and the $ 48 million in deferred revenue from its yet-to-release autonomous driving role offset the cost of factory closings.
Musk qualified for an unprecedented $ 2.1 billion payment Tuesday, his second biggest jackpot since May from the electric car maker after his massive stock surge.
(Reporting by Akanksha Rana in Bangalore and Tina Bellon in New York; Additional reporting by Paul Lienert in Detroit; Editing by Peter Henderson and Matthew Lewis)
