Tesla Posts $139-Million Gain in Q4 to Deliver Second-Consecutive Profitable Quarter

Though Tesla doesn't list its total production numbers for the quarter, using delivery numbers instead, we can estimate that that automaker was able to pump out and deliver a steady average of around 4,858 Model 3s per week, just 142 units short of it's 5,000 per-week goal. Tesla says that by the end of 2019, it expects to reach 7,000 units per week of sustained Model 3 production. Additionally, the automaker states that it expects a total of 500,000 units of per year between production in Fremont and Shanghai sometime between Q4 2019 and Q2 2020, barring any potential complications.

Overall, Tesla delivered 27,550 units of the Model S and X vehicles, a reduction of 160 units (less than one percent) when compared to its Q3 numbers. To combat the drop in its more premium offerings, Tesla increased the number of Model 3s delivered by 7,085 (13 percent), amassing a total of 63,150 units by the end of the quarter. By year-end 2018, Tesla has delivered 99,394 units of the Model S and X (combined) and 145,846 units of the Model 3.

Tesla said that an additional 1,010 units of the Model 3 and 1,897 units of the Model S and X (combined) were in transit to customers at the end of Q4.

Tesla also increased its cash reserves during the fourth, adding an additional $718 million to its $3 billion in liquid reserves from Q3. At the close of Q4, Tesla's total cash on hand exceeded $3.7 billion. 

In March, Tesla has a $920 million debt to repay from convertible bonds issued back in 2014 if shares fail to rally north of $359.87. Though TSLA's all-time high has surpassed this number previously, stocks would need to grow nearly 20 percent from today's opening number and remain steady. Tesla states that it has sufficient cash on hand to "comfortably" settle this payment.

Tesla has also recently begun construction on Gigafactory 3 in Shanghai. This project is anticipated to cost a staggering $2 billion, which Tesla plans to fund by raising capital in Asian debt markets.

Tesla shares were trading for $347 on January 17th, the same day that Saudi Arabia's Public Investment Fund hedged its 4.9 percent stake in the automaker to minimize any losses of its $2.9 billion investment. CEO Elon Musk's memo conveying layoffs was released the following day, resulting in a 13 percent loss overnight. At opening on Wednesday, shares traded at $300 and closed at $308.77, a 3 percent daily gain. Tesla released its fourth-quarter earnings after the bell.

Despite some setbacks (like its CEO racking up $40 million in fines with the SEC and tweeting about a "pedo guy"), Tesla had a stellar year. The company was able to sell a fantastic number of vehicles and its Model 3 even out-ranked the BMW 3-series as a top-selling luxury sedan by a factor of 2.5.

Tesla was able to continue using its growing economies of scale to further reduce the price of its vehicles, slashing the prices of its entire fleet by $2,000 earlier this year to offset the lowering of the Federal tax incentive. And, again yesterday, it reduced the price of the Model S and X by an additional $1,000.

The automaker also learned a few lessons along the way. It changed its manufacturing process in the name of simplicity, trimmed the fat from its workforce, and continued to research more cost-saving measure for future endeavors.

Despite the news that Tesla posted another profitable quarter, Wall Street has continued to bet against the automaker being able to do it a third time for Q1 2019. Musk describes the road ahead as being "very difficult" for Tesla, posing a challenge for the underdog to overcome its well-established rivals.

And Musk is right—Tesla has several issues to conquer in order to continue to thrive. Ambitious leadership and the drive to be an all-inclusive in-house shop has required a ton of up-front capital, but has also introduced problems which require creative solutions to rectify. The automaker has clawed its way through two of the three "hells" that it has visited so far (Production, Logistics, and Infrastructure); beginning overseas delivery and introducing the long-awaited $35,000 Model 3 while still remaining profitable will be the company's latest hurdles.

Tesla is also expected to begin rolling out its Autopilot v3 hardware during 2019 in order to further the capabilities of its Advanced Driver Assistance Systems (ADAS). Musk has made claims that Autopilot will soon begin to take action on traffic signals, roundabouts, and even street signs, which indicates that the company is still fully invested in improving its ADAS technologies. The automaker did indicate that it noticed an increase in both human and ADAS-related crashes during Q4.

Perhaps the largest challenge that Tesla will have to face in 2019 is the industry as a whole. Tesla rocked the entire automobile industry in a very short amount of time, shifting the focus from outsmarting CAFE standards to moving production towards electric cars. But now that the industry feels confident about the future direction of cars thanks to Tesla's bold push, they are rapidly gunning for Tesla's crown. Volkswagen and its subsidies are working to swiftly occupy the luxury market space with Porsche's upcoming Taycan and already has its eyes on the entry-level market space which Tesla is struggling to hit.