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Tesla Set a New Record in Profit, Boosted By Increase in Car Deliveries

On Wednesday, Tesla Inc recorded its fifth consecutive quarterly profit on record revenue of $8.8 billion, boosted by a rise in vehicle deliveries and other automakers’ sales of environmental regulatory credits.

The electric car manufacturer also reiterated its goal of producing half a million vehicles by the end of this year, a goal that will require it to ramp up vehicle sales dramatically in the fourth quarter.

In extended trading, shares were up 2.2 percent at $431.88 as the carmaker surpassed the third-quarter sales expectations of analysts.

Tesla said it had the capacity installed this year to manufacture and deliver 500,000 vehicles, but added that it has become more difficult to achieve its objective.

“Achieving this target depends primarily on a quarter over quarter increases in Model Y and Shanghai production,” the company said.

Tesla said it produced 139,300 vehicles in the third quarter earlier this month, a quarterly record for the electric carmaker, but some analysts questioned whether the company could meet its ambitious year-end target.

Tesla defied the broader automotive industry’s downward trend in 2020 and bucked a pandemic and economic upheaval with stable revenue and profitable quarters, sending shares up this year by about 400 percent.

Under Chief Executive Elon Musk, the business has experienced a meteoric rise, which appears to be vocal and at times unorthodox.

Despite Tesla trailing rivals in terms of sales, income, and benefit, Tesla’s market capitalization is the highest among all automakers in the world at $394.5 billion.

The growth of Tesla highlights consumer confidence in the future of electric vehicles and the shift of the company from a small carmaker to a world leader in clean cars.

But Craig Irwin, a Roth Capital Partners analyst, warned that Tesla’s lead could soon narrow. On Wednesday, General Motors Co unveiled an electric version of its Hummer pickup truck that will have a range of 350 miles (360 km) and compete with the futuristic Tesla Cybertruck, which is expected to go into production next year.

“The company is still valued incredibly richly, like it’s operating in a vacuum, yet competitors are working furiously to catch up,” he said. “More than 400 (models of) EVs on the road by the end of 2024 means there is real competition out there that will have an impact.”

On Wednesday, General Motors Co unveiled an electric version of its Hummer pickup truck that will have a range of 350 miles (360 km) and compete with the futuristic Cybertruck from Tesla, which is expected to go into production next year.

Up from $6.30 billion a year ago, sales rose to a record $8.77 billion. According to IBES data from Refinitiv, analysts had predicted revenue of $8.36 billion.

Tesla reported a profit of 76 cents per share, except products. It posted net sales of $331 million, excluding stock-based compensation awards granted to Musk, or $874 million.

Revenue from the selling of regulatory credits accounted for $397 million in the months from July to September, or 5 percent of Tesla ‘s total automotive revenue. Regulatory credits account for $1.18 billion so far this year, or 7 percent of overall automotive sales.

Tesla would not have managed a profitable quarter without the income from loans.

About a year ago, when California and around a dozen other U.S. states started raising the required share of zero-emission vehicles per manufacturer sold in their states, emissions credits became a more important source of revenue for Tesla.

But that revenue is expected to dry up as Tesla ‘s rivals begin selling more versions of their own electric vehicles.

With the slow recovery in the United States and Europe struggling with a second outbreak of the virus, some analysts have pinned their hopes for Tesla on China’s rise, which has begun to recover as consumers shake off the effects of the pandemic.

Tesla does not break up regional sales, but data from China’s automotive industry group, CPCA, showed that from July to September, Tesla Model 3 sedan sales remained roughly flat. In the third quarter, Tesla sold about 34,100 Shanghai-made Model 3s.

On Wednesday, Tesla said Model 3 production has increased to 250,000 vehicles a year at its Shanghai factory, its planned production rate.

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