Electric vehicle company Tesla posted surprise profit of $16 million in the first quarter of 2020 despite temporary disruptions in productions due to COVID-19 restrictions.

"This is the first time we have achieved positive GAAP net income in a seasonally weak first quarter," Tesla CEO Elon Musk said in an earnings call on Wednesday.

Tesla's revenue in Q1 2020 reached $5.9 billion, an increase of nearly $1.5 billion a year ago. The company ended the quarter with $8.1 billion of cash.

Tesla said the volume growth in the Gigafactory Shanghai led to a material improvement in margins of locally made Model 3 vehicles.

The Model Y also contributed to profits, Tesla said, adding that it represented the first time in its history that a new product has been profitable in its first quarter.

"Even with all the challenges, we achieved a 20 per cent automotive gross margin, excluding regulatory credits while ramping two major products," Musk said.

Musk said that the COVID-19 pandemic has caused the company to look closely at its cost structure and to be more efficient as a company.

"And we came to a conclusion that the right move was actually to continue to expand rapidly, continue to invest in the future and in new technologies, even though it is risky," Musk said.

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"And we've talked to some of our key investors, and they support that approach as well. So I think that there's clearly an uncertain future ahead. It's a bit of a bumpy road. But I think the long-term prospects are extremely good," he added.

Tesla shares rose more than 9 per cent after the company posted Q 1 profit. (IANS)