Deliverance must be sweet.
The atmosphere at Tesla, the American electric carmaker that’s been in “production hell” since it introduced the entry-level Model 3 saloon, must be amazing right now. The company has finally, finally eked a profit out of the 3. The company announced that the gross margins on the Model 3 have turned “slightly positive” in the second-quarter of this year, which is impressive considering that they haven’t even begun delivering the all-wheel drive variants, which yield greater profits.
In a letter sent by the company to investors, Tesla attributed the positive revenue to the continued improvement of the Model 3’s production. Up until that point, the company was making a loss on every Model 3 it delivered; However from this point onward, Tesla reckons that its gross margin on the 3 should “grow significantly” through the third- and fourth-quarter of the year.
Musk CEO said in a call with analysts later, according to The Verge, that the “goal is to be profitable, and cash-flow-positive every quarter going forwards.” So in Q3, the company expects to produce as many as 55,000 Model 3s, representing an increase of as much as 92% over the Model 3s production numbers over the second-quarter of 2018. Additionally, the company says that “deliveries should outpace production in Q3 as our delivery system stabilises,” which suggests that a lot of the Model 3s that have been spotted sitting in lots are actually ready for delivery.
The challenges that Tesla’s faced producing the Model 3 have enthralled casual observers and critics alike, with Tesla CFO Deepak Ahuja stating in the letter to investors that “no production ramp of any other product has been as closely watched and debated.” However, with the company now reliably churning out 5,000 Model 3s a week, it seems that the company is at last on its way to being a profitable company.
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