Production delays, weird factory tents and build quality concerns not enough to stop the Elon Musk juggernaut.
Concerns around unorthodox production methods, factory working conditions, build quality and delays have done little to dent interest in the Tesla Model 3, with the new more affordable car driving the brand to its first profit in years.
For the first time since late 2016, ‘the other red T’ is in the black, declaring a record $441 million (US$312m) profit in the third quarter of 2018 – meeting Elon Musk’s promise earlier this year that the brand would be profitable before the second half was up.
That profit comes on $8.6 billion in revenue, and the company now claims a cash position of $4 billion – up from $3.1 billion. Tesla’s improved position is helped by manufacturing improvements and, likely, the thousands of layoffs announced in June.
“Sufficient Model 3 profitability was critical to make our business sustainable – something many argued would be impossible to achieve,” Musk wrote to investors this week.
The ‘historic quarter’, as Musk has dubbed the brand’s third-quarter upswing, saw the brand deliver 83,500 vehicles in total – comparable to a huge 80 per cent of its entire 2017 performance.
Of those, 55,840 were the new Model 3, beating our conventional popular offerings like the Camry, Accord and Civic.
Whether that momentum can be maintained with future sales, remains to be seen, given these ramped-up Model 3 deliveries follow significant production delays and fulfil a mountain of pre-order deposits that rolled in after the car’s 2016 unveiling.
Some 450,000 deposits had been taken in the days and months following that announcement, and while delays had moved some buyers to cancel their orders, the company claims it was less than 20 per cent – leaving around 360,000 to be delivered.
The recent launch of an even more affordable ‘mid-range’ Model 3, priced at around $49,000 (US$35,000) “after [American] federal and California state tax benefits” will certainly help the brand keep buyer interest.
The Model 3 is expected to hit Australia in mid-2019.
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