Tesla makes $104 million surprise profit despite factory shutdown
Musk also said he's confident about rolling out full self-driving technology by the end of the year
DETROIT: Tesla overcame a seven-week pandemic-related shutdown at its California assembly plant to post a surprising $104 million net profit for the second quarter.
It was the electric car and solar panel maker’s fourth-straight profitable quarter, qualifying it to be included in the S&P 500 index of corporate titans. That decision will be made later.
Local government restrictions forced Tesla to close its only U.S. assembly factory in Fremont, California, from March 23 to May 11. Even with no production, the company paid roughly 10,000 workers for part of the shutdown and Tesla continued health care and other benefits.
The profit, compared with a $408 million loss a year ago, pushed Tesla’s shares up 5.7% to 1,682.99 in after-hours trading Wednesday.
But the company likely would have lost money without $428 million it earned from selling electric vehicle credits to other automakers so they can meet government fuel economy and pollution regulations.
Chief Financial Officer Zachary Kirkhorn said he expects money from the credits to double this year over the $594 million the company made in 2019, but said Tesla is not managing its business assuming that credits will contribute significantly in the future. The company is counting on manufacturing efficiencies to increase profits, he said.
Also Wednesday, Tesla said it has picked the Austin, Texas, area as the site for its second U.S. assembly plant. Austin was the front runner, but Tulsa, Oklahoma, was a possibility.
On a conference call with analysts and investors, CEO Elon Musk said that sometime in the future, Tesla will build a compact vehicle and a higher-capacity passenger vehicle, but he didn’t give a time frame. He said Tesla is on its way to making vehicles more affordable through manufacturing and design efficiencies.
“The thing that bugs me the most about where we are right now is that our cars are not affordable enough,” he said.
Musk also said he’s confident about rolling out full self-driving technology by the end of the year and said it already works well during his drives to work. The company based in Palo Alto, California, has updated its Autopilot driver-assist software to recognize stop signs and is working on navigating intersections and city streets, he said.