3 New Must-See Quotes from Tesla Management – The Motley Fool

Tesla s (NASDAQ: TSLA) Third quarter results was undoubtedly surprisingly profitable. The company reported net income of $ 312 million and positive free cash flow of $ 881 million, using stronger Model 3 production and deliveries. Likewise, management noted that it was expected to be profitable also in the fourth quarter.

But Tesla's earnings call after the third quarter's earnings release also contained many interesting shopping malls. Three topics discussed during the interview were management plans for its promised $ 35,000 model 3, model 3 expectations, and an update on how Tesla thinks about capital increases.

Why the $ 35,000 Model 3 Version is Not Here Yet

When Tesla first revealed Model 3, promised it a version with a starting price of $ 35,000. But the electric car manufacturer has not yet given its promise.

Of course, it was always management's plan to increase the production of higher versions of Model 3 and improve economies of scale first before starting the vehicle. But it has not stopped investors and analysts from wondering when the new vehicle will launch. Tesla will eventually sell 500,000 or more Model 3 units per year – and it will need to reduce the car's price to achieve this

Why is not the $ 35,000 version available? The cost of building model 3 is simply not low enough yet.

"[I] f we could produce a $ 35,000 car today, we would do that," explained T esla CEO Elon Musk. "We need more work, there's more work to do before getting $ 35,000 car and making it a positive gross margin." But Musk said that Tesla is "probably less than six months from [having a positive gross margin on Model 3] that's our mission."

More specifically, Musk later said in the conversation that the company wants the price of goods sold to the basic version of Model 3 to be

High hopes for model 3 demand

Asked for global demand Tesla expects model 3 to reach the price comes down, says Musk: "It's probably in the order anywhere from 500,000 to 1 million cars a year." This is of course a big jump from model 3's current annual run of deliveries of around 223,000. Of course, Tesla has achieved This race has a model 3 version that has a starting price of $ 49,000.

Musk says he believes that model 3 demand can come to this level because global demand for the corresponding price BMW 3-Series vehicles is around 500,000 units per year. "And in general, we find that we have to compete with the BMW 3 series quite well. So it seems logical that we want higher output or higher demand," explains Musk.

What about a capital income? [19659006] As Tesla is profitable, an analyst asked if Tesla plans to fund operations from internal funds and avoid retrieving capital from external sources. Musk answered:

Yes, that's our goal. We do not intend to raise equity or debt, at least it is for our purpose right now, you know that it may change in the future, but the current operating plan is to pay off our debts and not refinance them, but pay them and reduce the debt burden and overall impact of the company.

As usual, Tesla seems very optimistic about the future. However, given the company's latest strong increase in Model 3 production and deliveries and surprising profitability that showed that Naysayers are wrong, investors may consider giving more weight to the company's bold hopes again.