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.
Elon Musk, CEO of Tesla, near a Tesla factory. Wikimedia Commons
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.
"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)