Tesla announced a second-quarter profit of $104 million today, marking its fourth consecutive profitable quarter, a first for the company. It’s a benchmark that many skeptics thought Tesla would never achieve, though as usual it comes with a tiny asterisk.
That asterisk would be the sale of regulatory credits, which totaled a record $428 million this quarter and helped push Tesla over the profitability line, just like it did last quarter, when Tesla sold a then-record $354 million in credits. That isn’t a bad thing, necessarily, but it’s also not a sustainable business model long-term, since the credits are purchased from Tesla by other automakers who don’t have an all-electric lineup like Tesla does but may, in several years’ time, come close.
But that is still a bit away and Tesla should still rightfully feel like it accomplished something by remaining profitable in a quarter that was upended by the coronavirus pandemic. The credits are also just seven percent of Tesla’s quarterly revenue of a little over $6 billion.
It will also be a savored victory for CEO Elon Musk, while also triggering more of his compensation package. The second-quarter profit will also likely land Tesla in the S&P 500.
And despite the Fremont factory being closed down for the better part of two months, Tesla said it produced 82,272 cars in the second quarter, about 20,000 fewer than it did in the first quarter but impressive given the circumstances.
Still, maybe the most immediate news is that in its earnings report Tesla said it had a “site selected” for its next factory in the US, without saying where. Tulsa, Oklahoma, and Austin, Texas, had been in consideration for that factory, which will make the Cybertruck and more Models Y. And both cities had fought fiercely for Tesla’s selection but now it appears one of them has finally won.
Update, 6:07 p.m.: Tesla said Austin, Texas, was its choice.