Tesla on a roll, shorts in the hole as record earnings and Model Y news send stock soaring

Should we pity the poor short sellers, who just lost a cool billion bucks in one day, and over 5 billion so far this year, according to S3 Analytics (via CNBC)? Nah – they should have heeded the old adage about repeatedly doing the same thing and expecting different results.

Tesla announced a second straight quarter of strong earnings, as well as its fourth profit in the last six quarters, beating Wall Street’s estimates and catapulting the stock deep into record territory. What’s more, the company reported free cash flow of over $1 billion, and CFO Zach Kirkhorn said there would be no need to raise new capital any time soon, despite the large capital expenditures the company will be making in the near future to develop the Berlin Gigafactory, among other projects in the pipeline.

The Silicon Valley upstart is finally speaking Wall Street’s language: consistent earnings, positive cash flow and sustainable organic growth. In addition to these numeric achievements, there are several less tangible factors fueling the wave of optimism, including a sense that Tesla’s days of missing deadlines are behind it, and a growing realization that the vaunted “Tesla killers” from the legacy automakers don’t pose a credible threat to Tesla’s emerging dominance (they never did).

As usual, the earnings announcement and subsequent conference call contained a number of interesting tidbits for EV journalists to dissect and discuss over the coming days.

Tesla Energy is starting to show its potential. During the last quarter, it deployed 530 MWh of energy storage, including the debut of the Megapack, a utility-scale battery system, as well as 54 MW of solar power. Remember that Elon Musk has predicted that Tesla’s energy storage products could one day generate more revenue than its vehicles.

Model Y production has already begun, months ahead of schedule, and the first deliveries are to begin in March. Oh, by the way, its advertised range has been increased from 300 to 315 miles. Mr. Musk has said that demand for Model Y could outstrip that for all Tesla’s other vehicles combined, and given consumers’ appetite for vehicles called crossovers or SUVs, and the lack of any mid-priced electric option in the segment, it’s not an unreasonable prediction (unscientific survey of one: it’s the first Tesla vehicle that your favorite EV journalist might realistically consider buying).

The most dangerously disruptive development of all is the advent of Tesla’s next-generation battery technology. The evidence that this will become reality soon has been accumulating for the past year or so, and Elon cranked up the hype machine on the conference call. Tesla’s next-gen powertrain, which he described as “mind-blowing,” “hardcore engineering,” and “alien technology,” is expected by the end of the year.

Industry analysts have said that Tesla has a 10-year head start on the legacy automakers when it comes to battery technology. The company’s vehicles are already outselling comparable vehicles, both electric and fossil – as Bloomberg pointed out, Model 3 was the only EV to sell in any real volume last year in the US, and in Europe it was the third-best selling vehicle among all models in December. In terms of range and performance, there’s really no need for Tesla to make its vehicles any better, so any technical improvement to its battery technology could well be translated into lower prices. What effect would that have on the auto industry?

We may find out in a couple of months. “We’re going to talk about this on Battery Day, which is probably April,” said the Iron Man. “And then a lot of these questions will be answered. I think it’s going to be a very compelling story… I think it’s going to actually blow people’s minds – it blew my mind and I know it. So it’s going to be pretty cool.”

Sources: Tesla, Bloomberg, EVannex, Electrek, New York Times, CNBC