SAN FRANCISCO (Reuters) – Tesla Inc (TSLA.O) reported a net profit, positive cash flow and wider-than-expected margins for the latest quarter on Wednesday, delivering on Chief Executive Elon Musk’s promise to turn the electric carmaker profitable as higher production volumes of its new Model 3 began to pay off.
Tesla reiterated that it expected to repeat its net profit in the current quarter, helping drive the company’s shares up 14 percent in after hours trading.
The controversial Musk, who has often set goals and deadlines that Tesla has failed to reach, surprised investors by delivering on his pledge to make Tesla profitable for only the third quarter in its 15-year existence, providing a positive end to a difficult quarter for the CEO whose leadership was openly questioned only weeks ago.
“We can actually be cash flow positive and profitable in all quarters going forward,” Musk said, qualifying that he excluded those in which a big debt payment comes due, such as the first quarter of 2019.
Musk reiterated that Tesla currently does not plan to raise equity or debt.
Tesla said it would begin taking orders in Europe and China for the Model 3 before the end of 2018. Deliveries would begin to Europe in late February or March, and those to China in the second quarter, if not before, Musk said.
Musk said he planned to begin local production in China next year in a ‘capital efficient manner,’ suggesting the company might use a similar tent structure for car assembly that has already been used at its Fremont, California, plant. He gave no further details on plans in China.
Meanwhile, seeking to quell speculation that a large number of prospective buyers had canceled their reservations due to delays receiving their cars, Tesla said only 20 percent of North American reservation-holders had canceled their bookings.
Free cash flow at $881 million was positive for only the third time in Tesla’s history and was helped by a surge of new production of the Model 3, lower capital expenditures, and more efficient use of working capital.
While still below the production target it set for June of 5,000 Model 3s per week, the roughly 4,300 Model 3s the company is now averaging per week were enough to boost results.
Read more: Reuters