Tesla tops revenue forecasts but profits take a hit
Electric vehicle manufacturer Tesla has posted a smaller profit tonight than in its previous quarter, as fresh legislation and ramped up production costs took a bite out of its success.
The firm made a net profit of $139.5m (£106.4m) in the three months ending 31 December, compared with a $311.5m profit in the previous quarter when it still benefited from green energy credits.
The scheme took $2,000 off the cost of an electric car for US users, a cost that Tesla chose to absorb rather than raise prices when it expired at the start of January.
Read more: Tesla shares fall as it cuts car prices and misses production estimates
Earnings per share missed analyst expectations, as Tesla reported $1.93 compared to forecasts of $2.20 as polled by Refinitiv. Shares in Tesla fell more than 2.5 per cent in after-hours trading.
Chief executive Elon Musk said Tesla's most optimistic target was to achieve a very small profit next quarter, with a challenging but profitable rest of the year ahead.
Revenue was better than expected, with Tesla reaching sales of $7.4bn compared to analyst predictions of $7.1bn. However Musk warned that a lag in making its first Model 3 deliveries in the current quarter would weigh on sales when it reports in three months' time.
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Tesla said Model 3 production volume in California should reach 7,000 units per week by the end of the year, topping its previous target of 5,000 cars per week.
In order to achieve such a milestone last summer, Tesla was forced to build makeshift factory tents and lay off hundreds of employees. That trend has continued somewhat into the current quarter, after Tesla dismissed a further seven per cent of its workforce earlier this month.
"The run up to these results has been unusually eventful," said Nicholas Hyett, an equity analyst at Hargreaves Lansdown.
"[Tesla's] valuation relies on spectacular growth in the years ahead, but recent price and staff cuts suggests Tesla might find it more difficult than expected to deliver that growth profitably."