Tesla Achieves Third Consecutive Profit Despite Pandemic Disruption
Tesla earns $16 million in the first quarter by cutting operating expenses and boosting automotive margins. However, the company reports negative free cash flow amid the COVID-19 outbreak.
Tesla earns $16 million in the first quarter, marking its third consecutive quarter of profitability despite the COVID-19 pandemic. The electric vehicle maker generates $5.985 billion in revenue, which shows a 32% increase from the same period last year but a 19% drop from the previous quarter due to operational disruptions.
The company improves its automotive gross margins to 25.5% by reducing operating expenses by 13% compared to the previous year. Tesla also significantly boosts its revenue from regulatory credits to $354 million, a 64% increase from the first quarter of 2019, which directly pads its automotive revenue and profit margins.
While Tesla manages to achieve a GAAP profit, it reports a negative free cash flow of $895 million for the quarter. The automaker offsets this liquidity concern by raising $2.3 billion in February, bringing its total cash and cash equivalents up to $8.1 billion by the end of the quarter.