Tesla Inc. on Wednesday reported first-quarter net income of $16 million — its third-consecutive quarterly profit — even as the coronavirus pandemic shuttered its assembly plants in the U.S. and China.
The electric vehicle maker was aided by $354 million in regulatory credits sold to competitors, a 64 percent jump from the same period a year ago and 166 percent more than last quarter.
Total revenue in the quarter rose 32 percent year over year to $6 billion, with automotive revenue rising 38 percent to $5.1 billion.
"Q1 2020 was the first time in our history that we achieved a positive GAAP net income in the seasonally weak first quarter," the automaker said in a statement. "Despite global operational challenges, we were able to achieve our best first quarter for both production and deliveries."
The $16 million in net income compares with a $702 million loss in the first quarter of 2019.
Tesla delivered 88,496 vehicles in the quarter, up 40 percent over the same period a year ago. Deliveries of the Model 3 sedan and Model Y crossover totaled 76,266, 50 percent more than the 50,928 Model 3s delivered a year ago. Model Y deliveries began in mid-March.
Tesla said it had $8.1 billion in cash at the end of the quarter after a $2.3 billion capital raise. It posted negative quarterly free cash flow of $895 million.
The automaker declined to provide guidance for the year, saying "it is difficult to predict how quickly vehicle manufacturing and its global supply chain will return to prior levels. Due to the wide range of potential outcomes, near-term guidance of net income and free cash flow would likely be inaccurate."
Tesla shares surged just over 9 percent to $872.85 in after-hours trading on Wall Street.
Model Y growth
Tesla CEO Elon Musk, during a conference call with journalists, said the Model Y was profitable in its first quarter of production, a milestone none of its other vehicles achieved.
Tesla said it built more Model Ys in its first quarter of production than it built Models 3s in the sedan’s first two quarters of production in 2017.
“While many other companies are cutting back on investment, we are doing the opposite,” Musk said. “We are absolutely pedal to the metal on new products and expanding the company.”
That wasn't entirely true. The company said Wednesday it was postponing production of its electric semi truck to 2021.
But overall, Tesla said it was “continuing to significantly invest in our product roadmap.”
Musk also said Tesla planned to host a battery day in the third week of May, either in California or Texas, that he said would be “one of the most exciting days in Tesla’s history.”
He also said the company could announce the location of its next U.S. Gigafactory within a month, but “certainly within three months.”
Bloomberg has reported the city of Joplin, near Missouri’s border with Oklahoma and Kansas, is offering the company $1 billion in incentives and savings to build there.
Musk in February posted a Twitter poll asking followers if he should build the plant in Texas. Roughly 80 percent of the 305,000 followers who voted said yes.
Credits popular
Meanwhile, Tesla's boost from emissions credits comes courtesy of its legacy competitors. Tesla sells the emissions credits to manufacturers who need them to comply with emissions standards that are getting stricter in most markets around the world.
While Tesla doesn’t divulge which automakers it sells credits to, General Motors and Fiat Chrysler Automobiles disclosed last year that they had reached agreements to buy U.S. greenhouse-gas credits from the company.
FCA has said it’s going to spend 1.8 billion euros ($2 billion) on credits over three years and reached a deal in 2018 to pool its fleet with Tesla’s to comply with stricter European Union rules on carbon-dioxide emissions.
Analysts at Goldman Sachs, Credit Suisse and other firms are predicting established automakers will now be forced to again reconsider costly investments in electrification due to the immense financial strain spurred by the coronavirus pandemic. On Tuesday, Ford Motor Co. called off plans to jointly develop a plug-in Lincoln model with Rivian Automotive Inc.
Bloomberg contributed to this report.
