Tesla is still a profitable company

Elon Musk makes a profit : Electric car maker Tesla creates the first profitable year

Tesla boss Elon Musk has convinced the skeptics and even exceeded the optimistic forecasts of the analysts. After the US market closed, the Californian company announced on Wednesday (local time) that it had achieved a net profit of 104 million dollars in the Corona months of April, May and June. For the first time in its history, Tesla is profitable for four quarters in a row. Adjusted, Tesla even achieved earnings before taxes of 1.21 billion dollars, with sales of a good six billion dollars.

The share rose sharply after the trading session. The prospect of higher than expected deliveries and business results in the second quarter had recently fueled the price rally. Now Tesla is facing another milestone that could pave the way for Musk's company to climb into the US stock market elite in the S&P 500 index.

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A decisive prerequisite for this are four consecutive quarters with black numbers. But the steeper the share price rises, the louder the voices pointing to some construction sites that could become a serious problem for the US automaker if the hype subsides.

The rating of Tesla

With a market capitalization of at times 300 billion dollars (six times as high as Daimler), Tesla outshines all other automakers worldwide. Although Mercedes-Benz alone sold 935,000 cars in the first half of this year compared to Tesla's 179,000. The further the price climbs - in the past twelve months alone it has increased by 500 percent - the greater the doubts become as to whether this assessment is justified. NordLB analyst Frank Schwope believes the current market capitalization is too high and expects setbacks.

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There are few cautious analysts among the consistently optimistic analysts. The US bank Morgan Stanley is one of them. The experts expect that Tesla could get into difficulties in the short term due to demand and price risks, its capital requirements and in competition with other tech companies. In the long term, the automaker was primarily burdened by the difficult relationship between the United States and China.

The quality of Tesla

Quality defects have always been an issue at Tesla and a reason for the established automakers to make fun of their US competitors. It wasn't just about unclean gaps and paint damage, but also about strange mix-ups in the production of the interior or poor workmanship. In a recent study by the consulting firm J.D. Power to new car quality for the USA, Tesla only came last. Customers did not complain about software or mileage, but rather hardware errors. With the established car manufacturers, it is usually the other way around.

Service at Tesla

Tesla operates nine service centers in Germany, with six more to be added, according to the website. Such a thin network of workshops is unthinkable for established car manufacturers. Tesla advertises that customers "hardly ever have to visit a service center" thanks to remote diagnosis via app and the support of mobile service technicians. "Fast processing without delays" is promised.

In practice, however, looks different. There are increasing reports in which Tesla customers complain about waiting times of months and just as long workshop visits. The more successful the manufacturer, the greater the service problem could become. Especially in the premium segment - the Model S costs more than 100,000 euros with good equipment - Tesla strains the loyalty of its customers here.

Tesla portfolio and fleets

In terms of the number of units sold and the model range, Tesla is still far behind the classic automakers. With four different models (S, 3, X and Y), Tesla may be enough for its “S3XY” fan base. But the car manufacturer is struggling in one important segment: with commercial and fleet customers.

"Tesla had a market share of 0.6 percent in the entire fleet business in the first half of 2020," said a spokesman for market researcher Dataforce. “Although they are currently not represented in all segments.” In 2019, 900,000 new fleet vehicles were registered in this country. In total, around 60 percent of all new vehicle registrations are in the commercial sector.

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Especially in the small and compact car segment, Tesla has no offer. In the company car market, BMW, Mercedes and Audi dominate, increasingly with hybrid vehicles. Tesla cannot compete here despite the long range and an extensive network of fast charging points. Even in the rapidly growing SUV segment, Tesla's Model X only has a fleet market share of 1.1 percent.

Innovation at Tesla

With its central computer function, Tesla has undoubtedly set standards in the industry when it comes to software. The position in terms of assistance systems, autonomous driving functions and range is also outstanding. But overall, the Californians score only average when it comes to innovations. This was recently shown by the “Automotive Innovations Awards 2020”, a joint award from the Center of Automotive Management (CAM) and the auditing and consulting company PwC. Behind VW, BMW, Daimler, Ford and Hyundai, Tesla is only sixth.

In terms of the breadth of automotive inventions, German OEMs are still doing well. At the same time, all German premium manufacturers are in the process of bringing "Tesla Fighters" onto the market. Mercedes, for example, will be launching the EQS next year with a range of 700 kilometers, the electric equivalent of the luxury S-Class sedan.

Unlike Tesla, however, the classic manufacturers are in an expensive technological transformation. Daimler will also present its quarterly report today and provide details on business development. The group had already announced, among other things, that it incurred a loss of 1.7 billion euros in April, May and June.

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