COVID-19

Elon Musk and Tesla report a profit for the first quarter, despite COVID-19

Jack Stewart Apr 30, 2020
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Musk told investors Wednesday that the company is "pedal to the metal" on expansion right now. Win McNamee/Getty Images
COVID-19

Elon Musk and Tesla report a profit for the first quarter, despite COVID-19

Jack Stewart Apr 30, 2020
Musk told investors Wednesday that the company is "pedal to the metal" on expansion right now. Win McNamee/Getty Images
HTML EMBED:
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Tesla took analysts by surprise and reported a profit for the first three months of the year. Elon Musk’s electric car company made $16 million. That’s despite what the pandemic is doing to car factories and the ability of people to shop and to pay for new cars.

The start of 2020 was Tesla’s third profitable quarter in a row.

Garrett Nelson, analyst at CFRA, says that’s because the timing of this pandemic could have been worse for Tesla. The company had just finished spending a lot of money on the launch of the Model Y small SUV and the build-out of a factory in China.

“The fact that they’re not burning a lot of cash or spending a lot on projects really helps them in this environment,” Nelson said.

A factory in Germany and a new plant in the U.S. are still in the early stages, and Nelson says Tesla could defer those expenses if necessary. But in typical Elon Musk style, the CEO told investors on a call Wednesday that the company would push ahead.

“We are absolutely pedal to the metal on new products and expanding the company,” Musk said.

Tesla says it’s still too soon to say how the next quarter, and the rest of 2020, will go. A lot depends on how soon it can resume production of the Model Y, seen as crucial to the future of the company.

COVID-19 Economy FAQs

Are people still waiting for unemployment payments?

Yes. There is no way to know exactly how many people have been waiting for months and are still not getting unemployment, because states do not have a good system in place for tracking that kind of data, according to Andrew Stettner of The Century Foundation. But by his own calculations, only about 60% of people who have applied for benefits are currently receiving them. That means there are millions still waiting. Read more here on what they are doing about it.

Are we going to see another wave of grocery store shortages?

Well, public health officials are warning that we could see a second wave of the virus before the end of the year. And this time retailers want to be prepared if there’s high demand for certain products. But they can’t rely totally on predictive modeling. People’s shopping habits have ebbed and flowed depending on the state of COVID-19 cases or lockdowns. So, grocers are going to have to trust their guts.

What’s going to happen to retailers, especially with the holiday shopping season approaching?

A report out Tuesday from the accounting consultancy BDO USA said 29 big retailers filed for bankruptcy protection through August. And if bankruptcies continue at that pace, the number could rival the bankruptcies of 2010, after the Great Recession. For retailers, the last three months of this year will be even more critical than usual for their survival as they look for some hope around the holidays.

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