At the very least, Tesla CEO Elon Musk has managed to make short sellers sweat even more than they already were: Musk now says the company has finished its last unprofitable quarter (barring force majeure, an economic recession, or aggressive loan repayments, of course). By the middle of the second quarter earnings call, Tesla stock had already soared close to 10 percent in after hours trading.
The main reason for the success, company executives explained, was the discovery of unexpected manufacturing efficiencies. Musk said the company produced 5,000 Model 3s per week throughout July, laying aside questions about whether the pace of Tesla’s production was sustainable.
“I want to emphasize that our goal is to be profitable and cash flow positive every quarter going forward.” Musk said, before citing force majeure or economic recessions as caveats. “There may be occasional quarters where we pay back a big loan or something.” There’s a lot of reasons why Tesla is making more money per car than it used to.
The time it takes to build each car is trending down, higher volume means that Tesla can better negotiate with suppliers for lower prices on raw materials. But of course, these are advantages that all incumbent manufacturers enjoy.
“Manufacturing at volume is a lot of software,” Musk explained. “We’re quite good at software relative to other car companies.” Musk also said that the learnings from the first Gigafactory are informing more efficiencies in the other two planned Gigafactories in China and Europe. Read more from inverse.com…
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