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Tesla Model 3
Tesla/Handout via Reuters
Back on track, for now.
CHARGED UP

Tesla delivers a record-breaking number of cars (but probably not profits)

By Michael J. Coren

Elon Musk has never been good at managing expectations. Today, the Tesla CEO’s operation exceed even analysts’ cautiously optimistic estimates.

His company delivered 95,200 cars in the second quarter of 2019, exceeding the consensus prediction by 5%, according to FactSet. Tesla is expected to announce its second-quarter earnings soon. Shares were up as much as 7% in after-hours trading.

It’s much needed good news for Tesla. First-quarter losses (pdf) had hit $702 million and vehicle sales fell 41% to $3.72 billion over the prior quarter, as Model S and Model X sales nosedived. Tesla cited the loss of federal tax subsidies in the US and difficulties delivering vehicles overseas. Its latest deliveries’ report suggested the company had streamlined global logistics and delivery operations and also cut costs.

 

Roller-coaster news is a Tesla pattern

The launches of both the Model X SUV and Model 3 sedan came with initial sky-house expectations followed by months delays and disappointments as Tesla entered “production hell.” With the unexpected success of its recent products, Tesla has convinced lenders to fund their next expansion phase.

Tesla appears to have ironed out manufacturing issues and stabilized production. Of course, Tesla never stays steady for long. Musk pushes so many new products out the door—the Model Y crossover, a pickup truck, the Semi tractor-trailer, energy-storage products and more in the next two years— the cycle simply repeats again.

Will that be enough to put Tesla back into the black? Musk has said despite losing money for the first half of this year—after forecasting profitable quarters as far as the eye can see in 2018—he expects Tesla to return to profitability by the end of this year.

Investment analysts remain skeptical. “We believe the company is missing the required scale to operate profitably,” UBS analysts wrote in a June 28 note. “We do currently forecast profitability for the company when the Model Y ramps in 2021.”

Correction: A previous version of this post stated the date for Tesla’s next earnings call. It has not yet been confirmed.