The company expects to produce 50,000-55,000 Model 3 vehicles in the coming quarter – an increase of up to 92 percent from the previous quarter
Global tech giant Tesla released its second quarter (Q2) earnings report on Wednesday.
One thing that stood out and caught investors' attention is the fact that the company’s Model 3 car helped set a new record: a total revenue of USD 4 billion in one quarter.
Another landmark fact is that Tesla has finally started making money with the Model 3, by selling pricier Dual Motor All-Wheel Drive versions of the car; it is priced at a starting of USD 64,000.
According to the report, gross margins of the Model 3 turned ‘slightly positive,’ and Tesla approximates a significant growth of 15 and 20 percent in Q3 and Q4 respectively.
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CEO Elon Musk said that the goal now is to remain profitable and record positive cash flows in every quarter going forward.
In the next quarter, Tesla expects to produce 50,000-55,000 Model 3 vehicles – an increase of up to 92 percent from the previous quarter. As its delivery system stabilises, the company adds that deliveries should overtake production in the next quarter.
Tesla achieved its goal of producing 5,000 Model 3s per week in late June and now has plans to increase the number to 6,000 by the end of August, ultimately hitting a larger target of 10,000 cars per week by the beginning of next year. In Q2, Tesla delivered a total of 40,768 cars, out of which the Model 3 accounted for 18,449 deliveries.
The Model 3 was initially a bone of contention for Tesla as the company was struggling to turn a profit and was losing money on every Model 3 unit it shipped. Musk and CFO Deepak Ahuja admitted that even production of the car was plagued with problems; Tesla launched a new production line in a massive tent, shuffled its worker base, and worked round the clock to hit the 5,000-Model 3s-a-week target.
Tesla is continuing its elusive search for overall profitability, as it reported a loss of USD 743 million for the Q2 – marginally lower compared to losses of USD 770 million and USD 785 million in the previous two quarters.
The company’s revenue grew for the sixth straight quarter, mainly thanks to sales of the Model 3. This is despite a drop in revenue from its energy storage and generation business. Tesla also emerged with USD 2.2 billion in cash and equivalents; this should help Musk in raising funds in the coming quarter.