Those of us who saw past the tweets and the alarmist headlines were expecting good news from Tesla’s third-quarter earnings report, as it became apparent that demand for Model 3 remains robust as the company emerges from production hell. However, even most true believers were expecting a small loss, or perhaps a nominal profit.

Instead, the Seers of Silicon Valley delivered a grand coup, reporting record revenue of $6.8 billion (a 70% increase from a year ago) and a pretty fair profit of $312 million, or $1.75 per share – only the third quarterly profit in the company’s history, and the largest.

The Disruptors of Detroit blew past Wall Street’s modest expectations. Analyst estimates aggregated by Electrek were around $5.7 billion in revenue and a loss of about 50 cents per share.

A company’s revenue is a function of the number of units sold and the gross margin (the amount earned on each unit sold) – not the number of silly comments made or joints smoked by the CEO. Gross margin on the new Model 3 turned out to be higher than expected – over 20% on both a GAAP and a non-GAAP basis. Tesla also said that labor hours per Model 3 decreased by more than 30% in Q3. It’s been apparent for some time that the innovative EV is a hit with buyers – Tesla noted that Model 3 is now the 5th best-selling car in the US by volume, not only ruling the “luxury sedan” segment, but rivaling mainstream rides from Toyota, Honda, Nissan and Hyundai. Thanks to its comparatively high price tag, it’s the top-selling car in the US in terms of revenue.

There are reasons to believe that the high level of demand will continue. Tesla said that, of the 455,000 Model 3 reservations it reported in August 2017, fewer than 20 percent had been canceled. Elon Musk told analysts on a conference call that demand for Model 3 is “probably on the order of anywhere from 500,000 to 1 million cars a year.” And yes, the long-awaited $35,000 base version is still in the pipeline. “We don’t really have the ability to get to $35,000 right away [but we are] probably less than six months from that,” said Musk.

Tesla’s balance sheet, a nagging worry even for supporters, seems to be reasonably sound. The company says its cash position improved by $731 million during the quarter despite repaying $82.5 million in bonds, and it expects to stay on the right side of the ledger next quarter as well. “Our cash position should remain at least flat in spite of our plan to repay $230 million of convertible notes in cash during Q4,” says Tesla.

But wait, there’s more. Tesla’s China plans are accelerating – it recently bought land for a factory in Shanghai, and is “aiming to bring portions of Model 3 production to China during 2019.” Musk told analysts that he recently approved the final prototype of Model Y. Tesla’s energy business is also growing – the company deployed 239 MWh of energy storage and 93 MW of solar energy systems, increases of 18% and 11% respectively.

Elon Musk says we can expect more profits next quarter and beyond, and thanked everyone who believed in his vision. “Massive thanks to Tesla owners & supporters,” tweeted the Iron Man. “We wouldn’t be here without you.”

Source: Tesla, Electrek, New York Times, CNBC