Despite the better-than-expected earnings, Tesla CEO Elon Musk cautions that the California-based start-up has a number of challenges to focus on and that earnings are not at the top of the list. That said, boosting production of the maker's Model S clearly helped the bottom line, overcoming a significant reduction in zero-emissions vehicle credits that had been expected to punch the company into the red.
Tesla was able to boost second-quarter production an impressive 25 percent over the previous three months, to 500 vehicles a week. The original company forecast was for 4,500 deliveries, but it appears to have reached 5,150.
That helped the maker boost its gross margin (again, on a non-GAAP basis) to 22 percent, with a fourth-quarter target of 25 percent. Revenues for the second quarter reached $551 million, nearly 40 percent more than the consensus forecast of $395 million.
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Meanwhile, the maker entered the third quarter with nearly $750 million in cash and—perhaps more significant—without a penny in government debt. It received a wildly popular response to its recent stock offering, which helped it pay off a federal loan meant to spur high-tech automotive development. The money raised will now help Tesla fund development of the Model X crossover (expected to market late next year), as well as a lower-cost, more mainstream model that Musk has been promising.
An Internet pioneer who also serves as CEO of the rocket-launch company SpaceX and as chairman of SolarCity, Musk has repeatedly defied conventional wisdom—and the fact that few other manufacturers have gained traction in the nascent battery-car market.
He has ordered a number of steps aimed at improving the appeal of a technology hobbled by high costs, limited range, long charging times and uncertainty about battery life.
Those steps include what Musk described as a "bullet-proof warranty program" when it was announced earlier this year. Tesla is also in the midst of setting up a nationwide network of high-speed "supercharger" stations and has demonstrated plans to permit rapid battery swaps.
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