Tesla scored another quarterly profit, its fifth in a row, with net income of $331 million for the third quarter of 2020. That’s more than double the profit from the same quarter last year.
The company also announced free cash flow of $1.39 billion, which will help it build planned new factories in Texas and Germany without having to sell more stock. Total cash on hand increased to $14.5 billion because of a $5-billion stock sale earlier this year.
Automotive revenue was $7.6 billion, 42% higher than in the same period last year.
Chief Executive Elon Musk called it “our best quarter in history.”
That revenue total included $397 million for the sale of emissions credits to other automakers, an income stream that’s almost pure profit. Tesla has counted on emissions credit sales to register net profits. Without those credits, the company would have lost $66 million in the third quarter. As other automakers introduce electric vehicles, credit sales will become less valuable.
The company sold 139,593 vehicles in the third quarter, a 53% increase from a year earlier.
“If it continues on this same path, it seems that Tesla will become a fairly mainstream automaker before the midpoint of this decade,” said Jessica Caldwell, an analyst at Edmunds, via email. But “with more EV launches on the horizon, Tesla has a big red target on its back. And although there have been several so-called ‘Tesla-killers’ produced with little success, it’s only a matter of time before someone else gets the formula right.”
New competition is coming in the U.S., China and Europe that could affect Tesla’s future sales and earnings. This month, Tesla began shipping Model 3s made in China to the European market. Tesla sales in China have been flat all year, with deliveries to customers consuming only about 63% of the capacity of the factory, which opened in Shanghai late last year.
The company is facing increased competition in Europe as other automakers introduce new electric vehicles. In Norway, once a leading market for Tesla, the new Volkswagen ID.3, introduced in September, sold in greater volume than Tesla has sold there all year.
The company is also grappling with quality problems, offering to inspect some Tesla Model Ys prone to losing their roofs to the wind, and to repair bumpers on the Model 3, prone to falling off when they fill with water after rainstorms.
Tesla’s stock price, however, remains sky high, resulting in a market value of $394 billion, as investors bank on increasing growth. Its angular Cybertruck is planned for production at its new plant in Austin, Texas, if the company succeeds in constructing it by late next year.
On Tuesday, General Motors introduced a Cybertruck competitor, the GMC Hummer EV, accompanied by a Twitter promo from LeBron James.
Musk tweeted this week that the company had introduced a new beta version of its so-called Full Self Driving feature, distributed to a select group of vehicle owners. How many, he did not say.
Safety groups have criticized the Full Self Driving approach, which they say puts possibly dangerous technology on public highways. They note that, despite the name, Tesla still tells drivers to pay attention and keep hands on the steering wheel. Alphabet-owned Waymo began a full commercial service of driverless robotaxis in the Phoenix area this month, and GM’s Cruise said it plans to do the same in San Francisco by the end of the year.