Stock Market

Tesla Beats COVID Led Factory Shutdown, Makes $104M Profit

Tesla Beats COVID Led Factory Shutdown, Makes $104M Profit

Tesla posted its second-quarter financial statement and reported to make around $104 million in profit despite the pandemic led shutdown. The solar panel and electric carmaker, Tesla, has now qualified to be added in the US’s S&P 500 index of company titans. 

The revelation was shocking because the company’s Fremont, California assembly plant was closed due to lockdown by federal administrators from 23rd March to 11th May. The 104 million dollar profit is a huge jump because the company made a loss of $408 million last year for the same period.

Notably, Tesla also paid its 10,000 employees amid shutdown despite no productions for nearly two months. On Wednesday, the share price of the carmaker rose 5.7% and closed at $1683.

However, Tesla would have lost money if they had not sold the electric vehicle credits to other automakers to meet government pollution and fuel economy regulations. The company made around $428 million from this sale. Zachary Kirkhorn, CFO Tesla, says that the company targets to make double earnings from credits this year than last year, which was $594 million.

However, he continued to say that Tesla is focusing majorly on manufacturing to increase profits and not from credits.

On Wednesday, the carmaker also announced its second US assembly plant location at Austin, Texas. And the company generated nearly $964 million in cash from April to June, making the company’s total cash stock to $9.1 billion. However, the giant carmaker also has $8.5 billion in debts.

Tesla is increasing its cash stack because it needs to funds its new products and builds two fresh factories in Germany and the US. The company will start delivering its electric semi next year and needs cash to cover other expenses too.

Elon Musk, Tesla founder, said the company is looking to manufacture more affordable vehicles through design and production efficiencies and will also build a large capacity and compact vehicle for passengers, though not given when.

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