Tesla turns profit, Musk says no new capital needed for Model 3
By Narottam Medhora and Alexandria Sage
SAN FRANCISCO (Reuters) - Tesla Motors Inc (TSLA.O: Quote) reported its first quarterly net profit in more than three years on Wednesday, buoyed by nearly $139 million in sales of clean car credits, and Chief Executive Elon Musk said the company could turn a profit again in the fourth quarter.
The electric carmaker also signaled it has substantially reduced the costs for launching production of its high volume Model 3 sedan next year. Musk told analysts the company's current plan "does not require any capital raise for the Model 3 at all."
The tech billionaire said Tesla could still raise capital to "account for uncertainty ... and de-risk the business," however.
The third quarter profit and a leaner capital spending plan could help grease the wheels for Musk if he does seek to tap the markets for cash. Turning a profit, even for one quarter, should help counter skeptics who have questioned his ambitious plans for combining Tesla and solar panel maker SolarCity SCTY.O into a company offering roof-to-garage no-carbon energy systems.
Musk has made promises to investors before related to the timing of product launches, production and profitability, only to walk them back.
The company has weathered a difficult few months, beginning with the death of a Model S driver using Autopilot, Tesla's much vaunted semi-autonomous driving system, and culminating in the decision to acquire debt-laden SolarCity, which has increased scrutiny on the finances of both Tesla and SolarCity.
Earlier this month, Tesla told investors it expected to raise capital this year to fund the Model 3 launch, which will involve a substantial investment in machinery and product development. But Musk signaled in a tweet earlier this month that was no longer the case.
Tesla reiterated that the mass-market Model 3 sedan was on track for deliveries in the second half of 2017. The Model 3 has a starting price of $35,000, about half the price of the current Model S sedan. Continued...