Record sales push Tesla to 2nd straight quarterly profit

Shares are up after hours

DETROIT — Record electric vehicle sales in the fourth quarter helped to push Tesla Inc. to its second-straight quarterly profit, giving bullish investors optimism that sustained black ink lies ahead.

The Palo Alto, California, company said it made a net profit of $105 million from October through December, or 56 cents per share — but still posted an annual loss of $862 million.

The fourth-quarter earnings almost certainly will continue Tesla’s meteoric stock appreciation. Shares rose more than 11% in after-hours trading Wednesday to $647.93

The company said in its quarterly investor letter that it expects to “comfortably” exceed production of 500,000 vehicles at its factories in Fremont, California, and Shanghai.

Tesla said it is starting to ramp up production of the Model Y small SUV in Fremont, a key product for the company. Deliveries are to start by the end of March.

“We continue to believe our business has grown to the point of being self-funding."

The Model Y will be able to go up to 315 miles per charge, an increase over Tesla’s previous estimate of 280 miles, according to the letter.

Model Y production in Shanghai will start in 2021. The company also said it plans to start producing limited numbers of its electric semi truck this year.

Tesla also said in the investor letter that it’s moving ahead with preparations for a factory near Berlin, and the first deliveries from the factory are expected next year.

Tesla expects net profits going forward, with some possible exceptions at times surrounding the launch of new products.

“We continue to believe our business has grown to the point of being self-funding,” the letter said.

Tesla shares have more than tripled in value since May of last year, pushing the company’s market value above giant German automaker Volkswagen as well as the combined values of General Motors and Ford.

The electric vehicle and solar panel maker’s fourth-quarter revenue grew 2% to $7.38 billion as Tesla delivered about 112,000 vehicles during the period and a record 367,500 for the full year.

Fourth-quarter revenue figures beat Wall Street estimates of $6.99 billion, but net income fell short of the $152.4 million expected by analysts polled by FactSet.

Tesla continued to build its cash balance during the fourth quarter, reporting $6.27 billion available. That’s up from $5.34 billion at the end of the third quarter.

Wedbush analyst Daniel Ives called Tesla’s performance “potentially game changing,” and a sign of what could be a new era for CEO Elon Musk and the company.

“We would characterize the fundamental performance as impressive with clear momentum looking ahead as a global inflection in EV (electric vehicle) demand appears on the horizon,” Ives wrote in a note to investors Wednesday.

Key to future earnings will be production at Tesla’s new factory near Shanghai, and demand for electric vehicles in China, the world’s largest auto sales market, as well as sales of the mass-market Model 3 in Europe, Ives wrote.

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