Tesla\, Elon Musk report \'historic\' $312 million Q3 profit

TESLA FINANCIAL REPORT

Tesla reports $312 million profit in Q3 as Model 3 deliveries surge

Tesla produced more than 5,300 Model 3s in the last week of the quarter at its plant in Fremont, Calif. Photo credit: BLOOMBERG

Tesla reported net income of $312 million for the third quarter, its first GAAP profit in two years, as revenue doubled amid rising production of the Model 3 sedan.

The company posted a net loss of $619.4 million during the same quarter last year and a net loss of $717.5 million in the second quarter.

Record deliveries of the company's Model 3 sedan at gross margins of nearly 20 percent drove free cash flow of $881 million, ending the quarter with $3 billion in cash on hand, Tesla said in a Wednesday statement. Automotive revenue nearly doubled to $6.1 billion from $3.36 billion in the second quarter and from $2.4 billion during the same quarter last year.

Tesla produced more than 5,300 Model 3s in the last week of the quarter. According to the company, the number of hours to produce each Model 3 fell by more than 30 percent, as production levels stabilized after a difficult ramp-up that began in June of 2017. A total of 56,065 Model 3s were delivered to customers in the quarter, despite logistical challenges that CEO Elon Musk blamed on a shortage of car carriers. The company delivered 27,710 Model S and Model X vehicles during the quarter.

Fewer than 20 percent of the 455,000 Model 3 orders the company reported in August 2017 have been canceled, Tesla said. The company expects to convert most of its remaining reservations to orders as it rolls out lower-cost versions of the Model 3, introduces new financing options and starts deliveries to markets outside North America. Tesla expects the average selling price of the Model 3 to decline as this happens, but reaffirmed its guidance for profitability in the fourth quarter.

You can reach Edward Niedermeyer at eniedermeyer@crain.com -- Follow Edward on Twitter: @tweetermeyer