One week after Tesla CEO Elon Musk warned that “the road ahead is very difficult,” the company reported its second straight quarterly profit, albeit a smaller one than in the previous period.
The company posted net income of $139 million during the fourth quarter of 2018, compared with $311.5 million in the third quarter.
With Musk previously tying the company’s fortunes to the Model 3 sedan, Tesla said Wednesday that its production in Fremont, Calif., should reach 7,000 units per week by the end of 2019. Further, it expects to be producing the Model 3 at its factory in Shanghai by the end of the year.
December marked the highest-volume of production for a single month, the company said. Tesla said 63,359 Model 3s were delivered to customers in North America during the fourth quarter.
“We are now past the steep portion of the production S-curve, and we expect our production rate to continue to gradually improve,” the company said. “Every part of the Model 3 production process has demonstrated over a 24-hour period the ability to produce at an extrapolated rate of 7,000 vehicles per week. By the end of this year, we expect to be able to produce Model 3 at this rate on a sustained basis.”
The Model 3 was the fifth-best-selling passenger car in America during the fourth quarter and the best-selling luxury vehicle, according to data from Edmunds. Despite achieving some notable improvements, the research firm says Tesla still faces headwinds in the year ahead.
“Turning a profit, creatively addressing challenges and getting the Model 3 to the masses were huge milestones, but keeping up this momentum is virtually impossible,” said Jessica Caldwell, executive director of industry analysis for Edmunds. “Tesla’s product lineup is starting to get stale, and now thanks to the elimination of the federal tax credit, buying one has never been more expensive. … Tesla is in an awkward purgatory between being a startup and a mainstream automaker, and the biggest open question heading into 2019 is where the company really goes from here.”