ELECTRIC car maker Tesla has turned a profit for the fourth quarter in a row, and in doing so completed its first full year of profit since it was founded in 2003.
The US company made the announcement last night, declaring a profit of $104m (£81.7m) in the three months to June 30.
The news comes amid a staggering increase in Tesla’s stock price, even by its own rocketship standards, during a period of job losses and financial uncertainty for many of its rivals as the coronavirus pandemic effectively ground to a halt sales of new cars for around three months.
The company surprised pundits earlier this month when it announced it had delivered 90,891 vehicles between April and June, despite its factory in Fremont, California, being in a state of partial shutdown. Deliveries of the new Model Y SUV began earlier this year.
At the beginning of July, Tesla overtook Toyota to become the world’s most valuable car company. The company’s market value has more than quadrupled since March, now sitting at $290bn (£228bn).
This is despite Tesla’s annual revenue and car production sitting far below that of its closest rivals. Toyota, for example, sold 10.46m vehicles in 2019, while Tesla shifted 367,000, and the Japanese firm made ten times the revenue of the Californian company. The LA Times pointed out that the stock market values Tesla more highly than Toyota, Volkswagen and Ford — the three bestselling car makers in the world — combined.
The milestone takes Tesla one step closer to being added to the S&P 500, a stock market index that tracks 500 of the largest publicly traded companies in the US. Tesla currently trades on the Nasdaq. If it enters the S&P 500, its stock is sure to garner further interest from investors who follow the index.
The company’s profitability has been boosted by success in China, a key global market. Tesla opened its factory in Shanghai last year, and has said that the Model 3, its entry-level model, has been greeted by a warm reception. It is reportedly still on track to increase its sales to 500,000 cars this year, despite the tempestuous market created by the pandemic.
Elon Musk, Tesla’s CEO — who is reportedly in for a mammoth payday if Tesla’s valuation continues to grow — praised the company’s toughness over the lockdown period: “Our business has shown strong resilience during these unprecedented times. Despite the closure of our main factory in Fremont for nearly half the quarter, we posted our fourth sequential profit . . . while generating positive free cash flow of $418 million.”
Due to the soaring share price, Musk yesterday briefly became the fifth richest person in the world. The stock price has since dipped slightly, and as of 12:30pm BST on July 23, sits at $1,592.33 (£1,253.47) per share.
Amid the celebrations, Tesla announced that it has settled on a site near Austin, Texas as a location to manufacture the upcoming Cybertruck. Construction of a plant is reportedly due to begin later this year, with production of the controversial-looking pickup expected to begin late next year.