Tesla profit beats forecasts but Musk lets rip at 'fascist' coronavirus shutdown

Tesla Inc’s (NASDAQ:TSLA) first-quarter results were slightly ahead of expectations as boss Elon Musk complained about “fascist” coronavirus lockdown rules preventing the reopening of its vehicle factory in Fremont, California. Much lower costs resulted in a net profit of US$16mln, well ahead of analyst expectations for a US$199mln loss, and the carmaker’s first ever first-quarter profit. Sales of electric vehicles of US$6.0bn for the quarter were 31.8% higher than this point last year and beat analysts’ average forecast of $5.9bn. Vehicle production was up 33% year-on-year and deliveries up 40%, led by the cheaper Model 3. Operating cash outflow of US$895mln came as capital expenditure increased 62.5%, as Musk invested in preparations for the new Model Y electric crossover utility vehicle in both Fremont and Shanghai. Cash and cash equivalents stood at US$8.1bn at the end of the quarter thanks to a US$2.3bn equity issue partially offset by the negative free cash flow. Tesla said it expected production at its factories in Fremont and Shanghai to ramp up gradually through the second quarter. However, production at Fremont has been hit by the state government’s shutdown orders, with the factory having been idle since 24 March and the stay-at-home order due to run until at least the end of May. Musk said the state shutdown was a “serious risk” to the business as he let rip on the conference call with analysts and reporters after the issue of results overnight on Wednesday. “To say that they cannot leave their house and they will be arrested if they do, this is fascist. This is not democratic, this is not freedom. Give people back their goddamn freedom!” Musk said Tesla could announce the location of a new US factory by the end of July. Shares in the company were up almost 9% in aftermarket trading on Thursday. Analyst Nicholas Hyett at Hargreaves Lansdown said the production and deliveries numbers during a period including the early days of the coronavirus outbreak “is no mean feat”.  While the increase in cheaper Model 3s had done wonders for margins he added a note of caution.  “Before getting too excited though we would flag that free cash flow is not only negative but substantially so and only a modest improvement on this time last year. There’s still work to be done. “The immediate future doesn’t look like the ideal time in which to be selling premium priced cars, so perhaps it’s no surprise guidance has been paused.  “If the world slips into a potentially dramatic economic slowdown demand for big ticket items will likely fall and we would be very surprised if Tesla escaped unscathed.”