Tesla’s Record-Breaking $8.7 Billion Third Quarter is an Eye Opener

This marks Tesla's fifth consecutive quarterly profit.

via Tesla

Three weeks after the end of its third quarter, Tesla has officially lifted its silence on its financials, and folks—it's good.

During its third quarter, Tesla raked in more than $8.77 billion in revenue—its highest ever quarterly revenue on record—which alone exceeded analysts' expectations by nearly 5 percent. Of Tesla's total revenue, $7.6 billion is attributed to its automotive business, whereas $397 million is from the sale of regulatory credits (which alone is up 196 percent for the year and 42 percent for the quarter). Most importantly, this is Tesla's fifth consecutive quarter where it has posted a sizeable profit that would have been achievable even without the use of the credits.

This quarterly performance comes at no surprise given Tesla's record-breaking delivery numbers announced at the beginning of October. In total, the automaker announced a whopping output of 139,300 vehicles, the majority of which were delivered to customers. In total, Tesla has produced 318,350 vehicles in 2020 and says that it is on track to producing a half-million vehicles by year's end. To put that into perspective, that's nearly 2,000 vehicles per day during its final quarter of the year.

Tesla's margins on its products have also steeply increased. CEO Elon Musk notes that this has been a key factor in lowering the cost of Tesla's products, referencing his commonly noted points on economies of scale. The Model 3 had a price drop earlier this year, Tesla gave the Model S another price cut exactly a week ago, knocking the price of the base model down to just $69,420 (its second price drop in a week). Musk says that the Model Y will eventually follow the Model 3 in terms of price scaling.

If anything, Tesla's performance during its most recent quarter points serves as an eye-opener—or at least suggests that its future looks quite good in this small snapshot of time. Regulatory credit usage is down, vehicle deliveries are up, and its future product lineup is set to expand as it completes the construction of its newest production facility in Austin, Texas. To put it lightly, the next few years look promising.

While 2021 and 2022 are still a way off, Tesla did caution shareholders that it expected to spend around $2.5 billion on the expansion of existing assets as well as the construction of the Gigafactories in Texas and Germany. Tesla CFO Zach Kirkhorn says to expect more forward-looking statements to be presented during its year-end investor's presentation, which is slated to happen in about three months.

That likely won't be a problem, however, given that Tesla has drastically increased its cash on hand to $14.5 billion, more than doubling its $5.9 billion wallet from the closure of Q2. A great deal of this cash on hand is likely thanks to the automaker's recent capital raise courtesy of its five-to-one stock split and $5 billion sell-off of common stock.

Tesla shares rose around 3.7 percent in after hours trading following the news.

Got a tip? Send us a note: tips@thedrive.com