Tesla finance chief quits as carmaker posts first back-to-back profits
- by Ricky Curtis
- in Money
- — Feb 1, 2019
Based on management's previous commentary, results for the fiscal first quarter could also come in soft.
Tesla reported its cash position improved by about $1.5 million during the quarter even as it repaid $230 million in convertible notes.
Profits dropped in the final quarter of 2018, but Tesla said it expected. CEO Elon Musk said previous year that he expects "positive net income and cash flow" in the fourth quarter.
Adjusted fourth-quarter earnings per share: $2.10.
"Things really aren't going to get any better for Tesla in the US than they did at the end of 2018", Jessica Caldwell, executive director of industry analysis at Edmunds, wrote in a statement.
Again, the Model 3 prove to be Tesla's most significant driver.
Elon Musk, the electric-car maker's CEO, warned investors and employees two weeks ago that pressure to achieve a profit and make the Model 3 more affordable led to more than 3,000 job cuts at the company.
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Revenue beat expectations, at $7.23 billion, but the shares still slipped 1.1 per cent, or $3.27, to $305.50 in after-hours trading, reflecting investors' disappointment with the results. "It is critical that we continue this trend so that we can keep increasing the affordability of Model 3 while retaining a sustainable level of profitability", the company said in a statement.
"Thanks to the hard work and ingenuity of our manufacturing teams, by mid-2018 we successfully overcame these challenges and stabilized Model 3 production at high volumes", the report said. It added that despite recently introducing a lower-priced mid-range variant and other headwinds, gross margins for the Model 3 "remained stable" in the fourth quarter at more than 20%.
But some analysts were concerned by Tesla's indication that it is only making cars for China and Europe right now, and expects a gap of about 10,000 vehicles between production and deliveries because of vehicles in transit at the end of the first quarter. Total fourth-quarter production grew 8% from the third quarter to 86,555 vehicles.
In the fourth-quarter, Tesla said it delivered 63,359 Model 3 vehicles to customers in North America, and this month began producing Model 3 vehicles for Europe and China.
In more concrete terms, Tesla is "expecting to deliver 360,000 to 400,000 vehicles" throughout 2019.
While the company came up short of analysts' estimates for fourth-quarter profit, it posted US$910 million in free cash flow.
"I expect the demand for the Model Y will be maybe 50% higher than the Model 3", Musk said, adding that he saw annual demand for the existing Model 3 at around 700,000 to 800,000 units a year, and maybe as low as 500,000 if a recession emerges.
