Tesla reports fifth consecutive quarterly profit

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A Tesla Supercharger station is seen in Dietikon, Switzerland, October 21, 2020.

ARND WIEGMANN / Reuters

Tesla Inc. billed stronger than expected third quarter net profit following lower sales in the automotive industry in the summer in the United States.

The electric car and solar panel maker said on Wednesday it had earned US $ 331 million, or 27 US cents per share, for its fifth consecutive profitable quarter.

Excluding special items such as stock-based compensation, Tesla earned 76 cents per share, beating Wall Street estimates by 57 cents. Revenue from July to September was $ 8.77 billion, also beating analysts’ expectations of $ 6.3 billion, according to FactSet.

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But as in previous quarters, the company might have lost money if it weren’t for the US $ 397 million it earned selling electric vehicle credits to other automakers so they could comply with government regulations for fuel economy and pollution.

Profits were driven by a 44% increase in global shipments for the quarter, which came as auto sales in the United States fell 9.7% from a year ago due to consumer fears about the economy hit hard by the pandemic.

Shares of Palo Alto, Calif., Rose 3.6 percent on Wednesday in extended trading. Its results were published just after the markets closed. Tesla shares are worth around five times what they were at the start of the year, which is a split.

Third-quarter profit was more than double that of the same period a year ago, when Tesla earned US $ 143 million. Its streak of profitable quarters reversed years of losses. In the first nine months of this year, Tesla made US $ 451 million and appears to be heading for its first annual profit.

Jessica Caldwell, executive director of news at automotive website Edmunds.com, said the company’s results and production show it has left rookie territory and could become a mainstream automaker this decade.

But she said Tuesday’s release of an all-electric GMC Hummer shows Tesla is facing competition from several automakers.

“With more electric vehicle launches on the horizon, Tesla has a big red target on its back,” she said.

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On October 2, Tesla announced that it had delivered 139,000 SUVs and sedans from July to September, up from 97,000 deliveries during the same period a year ago. Analysts said China, where the economy is recovering, was a major source of sales for Tesla.

In a letter to investors on Wednesday, Tesla said it was still on track to deliver half a million vehicles this year, which was promised earlier by chief executive Elon Musk. The company said meeting the target “has become more difficult” and depends on increasing production of the Y-model small SUV and the company’s plant in China.

Tesla said it should have enough cash to fund its future products, which include the Cybertruck pickup and a Semi, as well as its long-term expansion plan. Tesla is adding Model Y production capacity to its Shanghai plant and building new plants in Germany and near Austin, Texas. Deliveries from the new factories are scheduled for next year, the company said.

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