After some recent controversy, a lawsuit against a saboteur and some unpopular layoffs, Tesla has some good news. After releasing the production numbers for the second quarter of 2018, the company has seen a three percent uptick in stock prices. It seems they kept their self-set goal of ending July producing more than 5000 Model 3’s per week. This is good news for the company as it seeks to fulfill the record-breaking orders for Model 3’s. This uptick in Tesla production indicates the potential for a profitable third quarter, a rare sight for the ambitious automaker.
Tesla’s Profit Loop
Tesla doesn’t often turn a profit. This is an odd piece of trivia for a company this big and this ambitious, and it is especially disappointing when one considers the recent layoffs. That said, this uptick in Tesla production does bode well for the company’s bottom line. The question is, will the company follow its typical loop that it follows after a profitable quarter? The few times Tesla has turned a profit in the past, it has immediately funneled that cash into production of a new vehicle.
When the Model S, and later the Model X, began to turn profits, production on the next vehicle would rapidly devour those profits. This is consistent with a company that aims to radically change the face of transportation, but it’s frustrating for investors and enthusiasts alike.
Tesla Production of Model 3’s Could Be Different
The Model 3 production line could be different for the company, though. As their first mass-market car, the Model 3 is meant to make the company a household name. While the Models X and S were experimental proof-of-concept style cars, the Model 3 is meant to be for anyone who wants an electric car. So, maybe this time Tesla will actually just make a profit and be okay with that.
No one expects them to stop planning for new cars, like the Roadster and Model Y concepts. It would, however, be nice to see them focus on just producing good, affordable electric cars. Especially in light of their recent layoffs and the controversy surrounding recent accidents with Autopilot, a bit of goodwill will go a long way for them. In the meantime, Tesla has expressed its goal for August is to produce more than 6,000 Model 3’s per week. It seems like they might just do it.
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