Tesla’s Elon Musk calling coronavirus lockdowns ‘fascist’ overshadows profitable quarter

Tesla’s Elon Musk calling coronavirus lockdowns ‘fascist’ overshadows profitable quarter

The outspoken CEO of Tesla Inc, Elon Musk, called on the sweeping US restrictions on Wednesday to stay at home to curtail the coronavirus outbreak “fascistically” when the electric vehicle maker made its third quarterly profit in a row.

His comments overshadowed an otherwise successful quarter that surprised many investors when automakers were hit by a slump in consumer demand and forced factory shutdowns.

The company’;s shares rose 8.8 percent to $ 871 in extended trading.

Tesla’;s profitable quarter comes just a day after Ford competitor Ford Motor Co of Detroit reported a $ 2 billion loss in the first quarter and predicted it would lose another $ 5 billion in the current quarter due to demand for coronavirus.

General Motors Co suspended the dividend and share buyback on Monday and will publish the earnings on May 6.
How Tesla is doing in the current quarter and the rest of the year will be an important test of the company’;s sustainability. If Tesla can limit its losses, or even continue its profits and outperform older automakers, it will be in a stronger position to take over the sale of rivals weakened by the coronavirus disruption.

Tesla produces a fraction of the cars from its rivals, but has a much greater market value based on expectations of massive growth.

One of Tesla’;s major disruptions was the government-imposed shutdown of the Fremont, California plant, which has been inactive since March 24, and orders to remain at home until at least May 31.

Speaking at a conference call on Wednesday, Musk said he didn’;t know when Tesla could resume production in California, and said the state’;s stay-at-home was a “serious risk” for the company.

To say they can’;t leave their home and will be arrested if they do, this is fascist. This is not democratic, this is not freedom. Give people back their goddamn freedom! & # 39;

Musk tweeted on March 6 that “the coronavirus panic is stupid,” but later offered to provide hospitals with free fans.
Tesla said it could not predict how quickly auto manufacturing and global supply chains will normalize, saying it would revise the full-year outlook for net income and cash flow when it reports its current three-month results.

Musk said that while other automakers cut back, Telsa made more investments. He said Tesla could announce the location of a new American factory in one to three months.

Tesla said in January that it expects positive cash flow on a quarterly basis and a positive net result. The company did not update its previous forecast of delivering half a million vehicles by the end of 2020 on Wednesday.

The COVID-19 pandemic caused by the new coronavirus has disrupted demand for cars, forcing automakers, including Tesla, to fire workers and close factories.

Demand for vehicles in the United States fell by as much as 80 percent in some hard-hit areas in March, but some analysts said sales seemed to recover slightly in April.

Tesla said on Wednesday that it expected production at the car plants in Fremont, California and Shanghai, China to increase gradually in the second quarter.

The company said operations at the Shanghai plant were progressing better than expected, with the model 3 sedan production rate expected to reach 4,000 units per week or 200,000 per year by mid-2020.

Gross company margins for cars in the first quarter increased to 25.5 percent.

But of the $ 5.1 billion in total car revenues, almost 7 percent was due to regulatory credits – money that Tesla receives from other automakers who purchase the company’;s carbon emissions credits to meet stricter regulations. The income from these credits has almost tripled compared to the previous quarter.

Hargreaves Lansdown analyst Nicholas Hyett also noted that Tesla’;s free cash flow was negative last quarter, improving only modestly each year.

“The near future doesn’;t look like the ideal time to sell premium-priced cars, so it may come as no surprise that guidance has been interrupted,” said Hyett.

Tesla said the free cash flow was affected by the growing inventory due to coronavirus outages.

Tesla closed its California plant just as production of its new Model Y electric crossover van was ramped up, expected to generate record demand and higher profit margins.

Tesla said on Wednesday that the Model Y was already contributing profit, which is the first time in the company’;s history that a new car is profitable in the first quarter.

Excluding items, Tesla posted a profit of $ 1.24 per share. Analysts had expected a loss of 36 cents per share.
Tesla shares are up 91 percent this year through Wednesday, recovering from a sharp slump in March.

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