California-based electric vehicle and clean energy company, Tesla Inc. has recently refuted low estimations by analysts by reporting a strong third quarterly profit report. The electric car manufacturer has managed to register a solid number of deliveries amidst this current coronavirus pandemic.
The ongoing health crisis has created a major dent in the automobile sector, with almost all of the manufacturing units shut as well as vehicle demands being on an all-time low. This has impelled major automakers to take drastic steps like furloughing their workers until things return back to normal.
According to Tesla, the near-term guidance of free cash flow and net income could be inaccurate owing to a wide variety of potential outcomes. However, the company will revisit this 2020 guidance again in its second-quarter update.
The electric car manufacturer hopes to gradually ramp up its production of Model 3 in Shanghai and Model Y in Fremont, California, by the second quarter. Evidently, Tesla’s profitable quarter follows its Detroit-based competitor Ford Motor’s financial report. Reportedly, the automobile giant has recorded a $2 billion loss in the first quarter and estimates a loss of an additional $5 billion as the coronavirus pandemic worsens in the current quarter.
If Tesla manages to limit its losses or manages to maintain its profit streak while outperforming legacy automakers, it would then be able to cement a stronger stance in sales against global automakers as they struggle to combat against the coronavirus disruption.
However, one of the biggest setbacks for Tesla has been the federal-ordered shutdown of all industrial plants in Fremont, California. Tesla’s manufacturing plant has been dormant since March 24 with the lockdown orders expected to be imposed until May 31.
Explaining his concerns on the move, Elon Musk, CEO, Tesla, said that California’s stay-at-home orders could pose a serious threat to the company’s business. In fact, Musk even went ahead to remark this as a fascist move that is completely against the idea of democracy.