Tesla produced almost $900 million in free cash flow this month

If Elon Musk were feeling an urge to gloat after Tesla’s surprise swing into profit, he certainly did not show it. In a quarter when most analysts still expected red ink, the electric-car maker came up with a $312 million net profit, its first since the heavy spending began two years ago to launch and ramp up production of the all-important Model 3. Since then, it has burnt through $6.2 billion of cash in the form of operating losses and capital spending. But this quarter the outflow ended. Tesla produced almost $900 million in free cash flow, even after $510 million of capital spending, a far bigger turnround than investors had expected… Shares in Tesla jumped 10 per cent on the news late on Wednesday, taking its gains this week to 22 per cent. For Mr Musk, the mood swing represents a degree of vindication, particularly after a recent self-induced crisis that brought a fraud suit from US regulators. The stock price, however, has yet to get back to its level in August before Mr Musk shot himself in the foot by claiming he had the money to mount a buyout. Also, the latest quarter still leaves open the key question facing the company: can it make a profit from building a true mass-market electric car?

Richard Waters