Via Financial Times

Tesla shares soared 20 per cent in after-hours trading after the electric car pioneer posted a net quarterly profit, surprising analysts, issued a bullish outlook and said its Model Y sport utility vehicle was “ahead of schedule” and would launch next summer.

The Fremont, California-based group’s net profit in the third quarter was $143m, providing huge relief to investors following a cumulative loss of $1.1bn in the first half of the year.

Tesla posted adjusted earnings per share of $1.86, better than even the most bullish of Wall Street analysts’ forecasts, which ranged from a loss of $1.25 a share to a gain of $0.34.

Third-quarter revenues, however, were $6.3bn, below expectations of $6.5bn and down from the $6.8bn it recorded a year ago. Tesla said “the majority” of this decrease reflects how the “percentage of leased vehicles has tripled” from a year ago.

The earnings indicate that the company is maturing, shifting focus to cost controls after a big spending phase to roll out the Model 3.

“Operating expenses are at the lowest level since Model 3 production started,” the group said. “As a result, we returned to GAAP profitability in Q3 while generating positive free cash flow. This was possible by removing substantial cost from our business.”

Tesla said it was now preparing for its next growth phase, adding that its “gigafactory” assembling the Model 3 in Shanghai “was built in 10 months and is ready for production”, at a cost that was 65 per cent less expensive than its production system for the vehicle in the US.

“Continued volume growth and cost control are an important combination for achieving sustained, industry-leading profitability,” Tesla said.

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Chief executive Elon Musk said on a conference call that he expects the Model Y SUV “will outsell the X, S, and 3” — all the other models in Tesla’s current line-up — “combined”.

Tesla added that small batch production of the Tesla Semi, its electric heavy-duty truck, will begin next year. The following year it hopes to begin production of a third “gigafactory” that would be located in Europe.

Mr Musk also said its cash on hand was now $5.3bn, versus $5bn three months earlier, thanks to positive free cash flow of $371m.

Earlier this month Tesla said it delivered “approximately 97,000” cars in the quarter, setting a new record but missing its own hope of reaching the 100,000 car milestone.

Investors have been sceptical that Tesla would meet its goal of delivering between 360,000 to 400,000 cars in 2019, but the company said it remained “highly confident” of getting into that range.

Its shares have been on a wild ride this year. Just before earnings they traded at $254, down 18 per cent for the year but 42 per cent higher than a low in June. After the bell they jumped more than a fifth to more than $308, their highest level since late February.