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Tesla reports $100 million quarterly profit despite Musk calling quarantine 'fascist'

Jul 23. 2020
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By The Washington Post · Faiz Siddiqui · BUSINESS, US-GLOBAL-MARKETS 

SAN FRANCISCO - Elon Musk once dismissed the coronavirus panic as "dumb." He called quarantine measures "fascist."

He even speculated that there would be "probably close to zero new cases" in the United States by the end of April.

On Wednesday, the CEO who has taken on the mantle as perhaps the business world's highest profile coronavirus skeptic, weighed in on the company's latest financial update for a quarter where it turned a profit despite its main manufacturing facility's closure for weeks. He chose not to discuss the issues in detail Wednesday, despite breaking into a profanity-laced rant during about the country's ongoing quarantine orders on the same type call in April.

Tesla reported a $104 million second-quarter profit Wednesday, attributing the gains to "operational improvements" to reduce expenses in a quarter where production was disrupted.

"Our business has shown strong resilience during these unprecedented times," Tesla said in its earnings news release. "Despite the closure of our main factory in Fremont for nearly half the quarter, we posted our fourth sequential" profit, the company said. The company reported revenue of more than $6 billion.

Because Tesla exclusively sells electric vehicles, other automakers can buy credits from them to help offset sales of their gas guzzling vehicles in order to comply with emissions regulations that require a certain percentage of vehicle fleets to be zero emissions. Tesla sold $428 million worth of credits in the second quarter, up from $111 million in the same quarter a year ago, boosting profitability.

During a conference call with analysts, Musk announced Tesla would be building its next "Gigafactory" plant in the Austin area. Tesla is expected to build its Cybertruck electric pickup at the plant, along with vehicles including its upcoming Semi truck.

Tesla will keep production of its Models 3 and Y, S and X in California, focusing the sedan and crossover production at that facility on the western half of the United States while using the Texas facility to serve the Eastern half.

"We'll continue to grow in California," Musk said on the call. "This is a nice split between Texas and California."

The move comes after Musk threatened earlier this year to move Tesla's headquarters from California to Texas or Nevada, as he sparred with local officials over Tesla's inability to resume production in Fremont, Calif.

During last quarter's call, Musk expressed fears of the financial risk posed to the company's production by the ongoing public health restrictions. Then he blasted the stay-at-home orders as "fascist," urging government officials to give people back their "freedom."

The comments were an abrupt departure from an otherwise standard corporate earnings update. The call briefly went quiet after Musk launched into his tirade.

Since then, Tesla restarted its production lines in Fremont, in defiance of Alameda County orders, even garnering support from President Trump as it sought to resume building cars. The company was allowed to fully reopen by mid-May and has been pumping out thousands of cars per week since then.

Tesla said this month it delivered 90,650 vehicles in the quarter from April through June, producing 82,272 vehicles during the period. That included 80,050 deliveries of the mass-market Model 3 sedan and newly introduced Model Y crossover, which is expected to be among the company's most popular offerings. (Tesla recently cut the price of the long-range dual-motor variant of the car by $3,000 to about $50,000 and axed a planned more-affordable standard-range model, highlighting what some analysts see as demand concerns.)

Meanwhile, Tesla has informed employees of some cases of the novel coronavirus inside the Fremont facilities. But the company and Alameda County officials have yet to disclose the full number of cases there. Employees have expressed concern over what they've said is a lack of proper social distancing in the plant.

Musk's April rant followed weeks of playing down the seriousness of the virus and pushing back on public health efforts to limit the spread of the virus.

Musk initially sparred with county officials in March, keeping the plant open despite local orders for businesses to close. After initial uncertainty over whether Tesla could operate, local officials declared Tesla was not essential, and the company agreed to wind down to "minimum basic operations."

Tesla ultimately reopened its factory in early May, before county officials gave the company the green light to do so.

And Musk has continued to tweet his opinions, too. "Tesla stock price is too high imo," he said, using shorthand for "in my opinion," to the confusion of analysts and investors.

On Monday, he tweeted a photo holding his baby son, who he originally posted was named X Æ A-12, with a German caption. It translates roughly to mean the infant could not use a spoon yet.

 

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