Elon Musk defied critics this week, delivering a surprise profit in the third quarter for Tesla.
After several quarters of major losses, and mountains of debt, Tesla swung back to profitability in the quarter. Deliveries of the much-maligned but highly-popular Model 3 were up slightly, and costs were down.
Tesla said its crossover Model Y car is on track for a release in the summer of 2020. “Just my opinion, but I think it will outsell Model S, Model X and Model 3 combined,” Musk told investors on an earnings call. Tesla executives said that the margins on the Model Y will be better than its other cars.
Musk also said that while the company’s EVs hog all the limelight, Tesla Energy is “the most underappreciate group,” and in the long-term, could be “roughly the same size as Tesla’s automotive [business].” Tesla’s solar roof plus battery storage is still in its early stages, but Musk said that “for about 18 months, almost two years, we had to divert a tremendous amount of resources” to fixing manufacturing bottlenecks for the Model 3.
“So, for about a year-and-a-half, we, unfortunately, stripped Tesla Energy of engineering and other resources and even took the cell production lines that were meant for Powerwall and Powerpack and redirected them to the car because we didn't have enough cells,” Musk said. Related: Uber To Offer On Demand Employment
Tesla now hopes to put those problems behind them, clearing the way for faster growth in home solar and battery storage. “Now that we feel that Model 3 production is in a good place and headed to a great place, we've restored resources to Tesla Solar and storage. And so that's going to be, I think, the really crazy growth for as far into the future as I can imagine.”
It was all-around positive news for Tesla. Bloomberg noted that Musk “makes good on ‘short burn of the century,’” a reference to the Tesla chief executive’s vow to beat back speculators shorting his company’s stock. Because of Tesla’s highly-publicized financial and operational troubles over the past few years, Tesla has had a target on its back from short sellers. CNBC said that investors shorting Tesla likely lost more than $1 billion after the automaker’s share prices surged by 20 percent after the earnings release.
Tesla’s rebound comes at a time when EVs are starting to gain more traction. The number of new EV models set to hit the marketplace will dramatically increase in just the next few years and the price gap between EVs and gasoline models is converging.
Ford just announced that it would unveil its “Mustang-inspired” all-electric SUV in November. The car has been likened as Ford’s answer to the Tesla Model Y.
A week ago, Ford announced that it would soon offer North America’s largest EV recharging infrastructure, with plans to surpass Tesla. Ford said the network will include fast chargers, which can replenish 80 percent of the car’s battery in 40 minutes. The company is also working with Amazon Home Services to install charging equipment for those that buy Ford electric vehicles. Related: NYU Professor: Tesla Could Lose 80% Of Its Value
Unlike Tesla, Ford’s recharging network – which will come together with the help of EV charging companies such as Greenlots and Electrify America – will allow for recharging of vehicles made by other companies besides only Ford. Tesla’s stations, on the other hand, only allow Tesla vehicles.
Meanwhile, Honda made an even more eye-raising announcement this week, stating that it would stop producing gasoline-only cars in Europe by 2022. Instead, it will electrify all of its models. “Honda is the world's largest engine manufacturer, and from what we have announced today we are committing to ending all mainstream non-electrified petrol and diesel production for Europe by the end of 2022,” Honda senior vice president for Europe, Tom Gardner, told Sky News.
According to Axios, the number of EVs on sale in the U.S. will rise from 21 this year to 35 in 2020. From there, the offerings grow even faster, reaching an estimated 130 by 2026.