NEW YORK (Reuters Breakingviews) – Tesla is back on the road, with its battery charged at least one-quarter full. The delayed ramp-up of its Model 3 revved up the electric-car maker’s latest sales and drove it into the black in the three months to September.
Chief Executive Elon Musk has long promised that the mass-market sedan would transform the $50 billion Tesla from a loss-making producer of innovative luxury vehicles to an industry titan for the 21st century. After numerous fits and starts, the past quarter offered a glimpse of that vision.
Overall revenue more than doubled to $6.8 billion, nearly half generated by the Model 3, and the company ended its string of losses by turning a profit of $312 million in the period, according to Wednesday’s release. It also managed to give itself a little financial breathing room, ending the period with nearly $3 billion in cash, up more than a third from the end of June.
Musk can even claim victory over at least one short-seller, with Citron Research turning bullish on the stock on Tuesday, calling the Model 3 a “proven hit.” Tesla’s stock popped more than 10 percent in after-hours trading on Wednesday.
The turnaround couldn’t have come at a better time. The pressure of efforts to increase volume earlier this year coincided with increasingly erratic behavior from Musk, who in July launched Twitter taunts at a cave diver in Thailand and the following month roiled markets by saying he planned to take the company private with “funding secured.” The latter brought charges from the Securities and Exchange Commission, which Musk settled last month, agreeing to pay $20 million and cede the chairmanship of Tesla’s board to an independent candidate.
It’s far from clear that Tesla’s newfound profitability is sustainable. Model 3 production averaged 4,300 a week in the quarter, missing Musk’s target of 5,000 and well short of his 2019 goal of 7,000. The company may be vulnerable to growing competition from the likes of BMW, and Consumer Reports on Wednesday said Tesla had dropped further down its latest annual auto reliability survey. It’s still possible Tesla could need to raise capital, and Musk can be his own worst enemy.
Still, after a riotously unstable quarter seen from the outside, any hint of things inside Tesla settling down to normalcy is welcome.