Tesla Motors’ (NASDAQ:TSLA) most recent earnings report caught Wall Street by surprise. The company posted its first profit in three years after selling more vehicles than expected. Tesla reported a profit of 71 cents a share for the third quarter. Wall Street had been expecting a loss of 54 cents a share. Revenue rose 145 percent to $2.3 billion in the quarter when compared to the same quarter a year ago.
In an August e-mail, Chief Executive Officer Elon Musk pushed workers to cut costs, increase deliveries, and drive the results into positive territory. Those efforts resulted in a stunning earnings beat for the third quarter of its fiscal year. Tesla said that production improvements, cheaper lease deals, and reported discounts helped its third quarter deliveries rise by 70 percent.
Tesla sold 24,821 vehicles in the quarter, more than double the number from a year ago. The company had set a 50,000-unit goal for the last six months of 2016. The company also seems on pace to meet its goal of selling between 80,000 and 90,000 vehicles this year.
The company recently made a controversial $2.6 billion bid for SolarCity, a solar power firm. Musk owns 22 percent of SolarCity. He is also chairman of the company. The SolarCity deal fast became a sore point with investors. A shareholder vote on the deal is scheduled for Nov. 17. If approved, SolarCity may contribute cash to the business in the fourth quarter.
The company is ramping up production of its $35,000 Model 3 sedan. Interest in the Model 3 has been high. Tesla has done no marketing beyond a webcast announcing the car, and still registered 373,000 pre-orders for the vehicle. The Model 3 is due to hit the streets in late 2017 and won’t be produced in significant numbers until 2018.
Some are concerned that the Model 3, with its lower price, could drag down profit margins. Musk said in an interview that the Model 3’s production cost should be “about half” that of the higher-priced Model S sedan. Tesla sells the Model S sedan for $100,000 on average.
Tesla said it expects to get through the rest of the year without raising cash. Musk said on a conference call that the company doesn’t need more money to get the Model 3 to market. The company also reported $139 million in sales of zero-emission-vehicle credits to other car-makers who need them to meet California’s clean air rules.