Elon Musk showered investors with good news on the 2018 conference call. His company managed to reach a profit in two quarters in a row, in 2019 the production of electric cars will be increased at least 1.5 times, in June Musk will show a electric pickup truck, and by the end of the year all the vehicles of the company will become completely autonomous.
Records and losses
Elon Musk considers 2018 to be the hardest in his career. Attempts to establish a massive production of Model 3 sedans cost him his health and personal life. However, the entrepreneur continued to set ambitious goals. Back in April, he promised that in the last two quarters of 2018, Tesla will make a profit.
Musk fulfilled his promise. In the fourth quarter of 2018, the company’s revenue amounted to $7.2 billion, and profit is $139 million.
At the same time for the first time in 15 years of existence, Tesla was able to benefit two quarters in a row. In general, in the entire history of the company it reported on the profitable quarter only four times.
Total revenue for the past year reached a record $21.4 billion, and losses amounted to $1 billion – two times less than a year earlier. The stock of cash by the beginning of the year was set at $3.7 billion.
“Last year, we faced serious challenges in the production process of the Model 3. Thanks to the hard work and ingenuity of our workers, by the middle of 2018 we coped with the tasks and set up a massive production of sedans,” Tesla said in a letter to investors.
In total, last year Musk’s team sold a record 245,240 electric cars. But this is two times less than the company had previously planned.
Of these, about 140,000 were Model 3 sedans, which plunged Tesla first into a “production hell” and then into a “logistics” one.
In 2019, Musk expects to produce from 360,000 to 400,000 electric vehicles, increasing production by 45-60%.
“Even if a global recession sets in, we will still release 50% more electric cars than before,” the entrepreneur promised during a conference call.
The achieved records inspire Elon Musk, but do not impress the financial department of the company. Immediately after the publication of the results of the fourth quarter, it became known that financial director Deepak Ahuja would leave Tesla. As Verge recalled, previously the team left the chief accountant and vice president of international finance and operations.
Analysts is also not impressed by Tesla’s performance. According to Reuters, they were counting on greater profits. As a result, the value of the company’s shares fell by 6%.
In 2019, Musk plans to consistently make a profit every quarter, as well as to sell Model 3 at a reduced price. So far, the cheapest version of the electric sedan costs $45,000 – $10,000 more than originally planned. To achieve these goals, Tesla will have to cut costs.
“We must mercilessly reduce costs in order to produce cars at an affordable price without becoming bankrupt,” said the businessman.
He stressed that the Model 3 is in demand, but the high price stops buyers. To reduce the prices of the company, it is necessary to start production of cars at a factory in China. Subject to the simultaneous operation of factories in China and the United States Tesla will be able to produce 10,000 copies of Model 3 per week. However, experts recognize that the production of electric cars in Shanghai will begin no earlier than the end of the year, so Tesla should not rely on new production facilities.
In parallel with the release of Model 3, Model S and X Musk plans to do other projects. In June, he promises to show a model of an electric pickup truck, the production of which will begin in 2020.
In the list of priorities of the entrepreneur is also a crossover Model Y, a solar roof, a truck and Roadster sports car.
Tesla also continues to work on the autopilot system for electric vehicles. According to him, Tesla electric cars will become completely unmanned by the end of the year, but whether this function will be available to consumers depends on regulators. Over time, Tesla will simplify management – many processes will be automated. So, the car in autopilot mode will learn to navigate at intersections with traffic lights, and will also move independently around the parking area.
Electric cars of the entire Tesla model range will also master self-diagnostics. As soon as the system detects a breakdown, the car will immediately call not only a tow truck, but also a replacement car.
Earlier, Musk recognized that the future of the planet depends on Tesla’s success. Even if the company becomes bankrupt, but will be able to popularize its development, it will still benefit society.
“Our success will be important for all the inhabitants of the Earth. The future depends on it,” the entrepreneur is confident.