Tesla pulled out all the stops over the summer to hit an ambitious target set by Elon Musk: report a profit in the third quarter of this year. The automaker indeed posted a $312 million profit on Wednesday, a tremendous feat to consider, given it’s making only all-electric cars. So what now?
The results—only the third profitable quarter Tesla has ever reported since the company was taken public in 2010—are sure to shore up confidence in Musk, who has spent 2018 seemingly doing whatever he can to divert attention away from issues with the production ramp of the Model 3. It was only weeks ago that he dropped a haphazard tweet about taking the company private, setting off a SEC investigation (and, later, a settlement that’ll see him stepping down as chairman), a number of lawsuits, and a criminal investigation from the feds.
At the same time, Tesla has faced numerous complaints about workplace safety and a separate trial from the National Labor Relations Board, which alleged that Tesla management violated federal labor laws. A ruling is expected in the near-future, and Tesla continues to maintain that labor conditions at its factory in California continue to improve every day.
Amid all this, Tesla managed to actually start making cars at a consistent clip, a notable achievement in an industry where few players can survive from the ground up. For anyone who believes in Musk’s philosophy of utilizing Tesla to goad the world into using renewable energy, Wednesday will go down as a memorable moment in the company’s 15 year history.
There remains plenty to unpack going forward. While the Model 3 production fell into chaos late last year, Musk introduced a new all-electric semi and a planned update of Tesla’s Roadster. Almost nothing was said of the semi on Wednesday, even though Tesla has taken pre-orders from major corporations for months, ahead of what he described as an all-but-certain 2019 launch date of production. Where the semi will be built is a mystery.
There’s also the Model Y crossover, which Musk contends will be much easier to begin making, after the missteps with the Model 3 (a similar line he’d mentioned ahead of the Model 3 launch, so, it’s obviously worth taking with a grain of salt). Tesla is angling to gain a production foothold in China, and reports this week confirmed the Model Y would be made in a future would-be facility there. Whether Tesla can actually launch the Model Y without descending into madness again, and keep the company on strong financial footing, is another point going forward.
Musk himself could benefit from keeping it together. The CEO loves to yuck it up on Twitter, but that has caused endless headaches for the company, whose stock price is inextricably linked to him. Whenever he acts like a bonehead, the share price tumbles, and for the tens of thousands of workers who have a notable chunk of their compensation tied up in Tesla equity, surely they’re hoping he doesn’t continue to do anything stupid.
The company also needs to introduce the $35,000 base trim of the Model 3, the selling point of the car from the outset. Musk’s only moment on Wednesday where he came off as annoyed had to do with this, saying the company isn’t “intentionally” holding back the $35,000 model, and aims to start making it by the spring of 2019.
That’s a tall order to fill, especially for a guy who declared on stage in July 2017 that the “whole point of this company was to make a really great, affordable electric car.”
“And we finally have it,” Musk said.
Not yet, exactly. The cheapest version at this point is $46,000, and while the company said less than 20 percent of its 455,000 reservations of the Model 3—by last count in August 2017—have since cancelled, it remains a mystery how many of them were waiting for the $35,000 model to be introduced.
At the same time, other, affordable options like the Chevy Bolt and Nissan Leaf are rolling out, so the question of “when’s it coming” has been rightfully a persistent question nagging at Musk’s side. If a more-affordable model was the “whole point” of Tesla all along, then the questions won’t stop until the $35,000 model is introduced—and the company figures out how to handle logistics of deliveries and car servicing (which Tesla pointed out on Wednesday is indeed something else at the forefront of its mind).
All told, Tesla has a mountain of Musk’s promises to attempt to keep going forward. With a CEO who’s prone to throw things into disarray by way of a scant, dumb remark on social media, it’s safe to say the company has a long way to go to maintain the position it’s in. Musk could do himself and everyone else a favor in the meantime, and never tweet again. But that’s as likely as the $35,000 Model 3 showing up tomorrow.