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Tesla released its financial results for the third quarter and posted a profit for the first time in years.
This is mainly thanks to the many improvements made to the Model 3 program, which has not only become the best-selling car in the United States in terms of revenue, but it is also becoming very profitable.
We were already expecting Tesla's revenues to rise sharply this quarter as Model 3 ramped up, generating 56,065 deliveries in the last quarter.
You add S model and X model shipments to this amount, and Tesla delivered an astounding 83,775 vehicles in the third quarter.
This resulted in record car revenues of more than $ 6 billion.
Tesla now states that "Model 3 was the top-selling car in the United States in terms of revenue and the fifth-best-selling car in terms of volume."
They published the following impressive graphics to illustrate the importance of this achievement:
It's amazing for any type of vehicle program and even more so for an electric vehicle in production for about a year.
More surprisingly, Tesla made a profit of $ 312 million ($ 516 million non-GAAP) in the quarter.
That's more money than Tesla has ever won since the automaker recorded steady losses as it tried to increase production.
Most analysts posted slight losses for the quarter, but even those who were expecting earnings did not consider this type of income over the past 3 months.
The gap can be attributed to an increase in Tesla's gross margin much faster than expected by most people.
The automaker posted only a 5% gross margin in the second quarter and a 15% forecast in the third quarter, which most analysts say would be difficult to achieve.
Yet, Tesla has actually generated more than 20% gross margin for Model 3.
They did it by two different approaches.
First, the average price of Model 3 increased during the quarter due to the higher composition of all-wheel drive vehicles:
The production system of Model 3 has stabilized in the third quarter. We have moved from a steep S curve to more gradual monthly improvements. Among other things, we have made the necessary modifications to allow the production of a full-wheel drive (AWD) model 3, without disrupting our production pace. We started the quarter with only 3 rear-wheel drive models and finished the quarter producing almost all-wheel drive cars. Although the construction of AWD cars is much more complex, we produced 5,300 models 3 in the last week of the third quarter.
But Tesla also claims to have made Model 3 production significantly more efficient during the quarter.
The manufacturer claims that working hours have decreased by more than 30% in just 3 months:
"The number of hours worked per model 3 decreased by more than 30% from the second to the third quarter, falling for the first time below the level of the S and X models."
The company said it expects costs to continue to improve in the fourth quarter, while increasing the production rate of Model 3.
Electrek's Take
I suspected a significant increase in gross margin during the quarter, but I'm still surprised by the numbers.
As we reported during the last quarter of Tesla production, the manufacturer was unable to reach the target of 6,000 units per week, or even actually maintain 5,000 units. per week.
I thought the lower volume could indicate that Tesla was focusing on the efficiency of the production rather than the quantity and of course.
But I still did not expect a 30% reduction in the hour of work.
This quarter is an incredible achievement of Tesla. The gross margin is also a good indicator that Tesla will soon be able to realize the 35,000 USD.
Model 3 is without a doubt a truly successful vehicle program and it still has to be launched around the world.
Exciting moments
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