Tesla Expects To Sell More Than 500,000 Cars In 2020

The United States based electric car maker Tesla announced another quarter of profits and said that more than half a million cars will be sold by it in the current year. This propelled the share price of the company sharply in late trading.

The last quarter of 2019 saw Tesla, founded by Elon Musk, announcing a profit of $105 million against revenues of $7.38 billion. Both the numbers were better than what the market was expecting. The announcement resulted in a 7 per cent jump in the share price of the company.

Tesla has passed through a long period of uncertainty when critics and investors doubted about the profitability and sustainability of the business model of the company. However in recent quarters, the company has surprised one and many by announcing unexpected profits. The company made a quarterly profit for the first time in its history in the third quarter of last year and since the announcement of those results in October, the share price of the company had jumped by almost 120 per cent. The company however is yet to make an annual profit.

The company expects to be able to “comfortably” sell more than 500,000 vehicles in 2020. Tesla said in a statement, and added that this was because of an increase in production of its Model 3 vehicles in its Shanghai plant and the production ramp up of its Model Y in Fremont, California.

“Production will likely outpace deliveries this year,” the company noted in its statement.

In 2019, the company delivered about 367,500 cars which was about 50 per cent more than what it had managed to deliver a year ago.

The recent increase in the share price of the company has increased the market valuation of the company to an amount which is greater than the combined market value of General Motors and Ford. Earlier this month, the market value of the company crossed the $100 billion mark and closed $104.7 billion just before the latest news.

According to an agreement with the board of Tesla, a bonus of $350 million will be earned by Musk if the market value of the company remained over $100 billion for the next six months under his leadership. That would be the first of the 12 such bonuses that has been agreed to be given to the billionaire by the company board and which will amount to a total of $50 billion if he manages to turn Tesla into a company with a market valuation of $650 billion over the next decade.

However critics of the company are skeptical about whether the company would be able to achieve such a valuation for such a long time because about 15 per cent of the stocks of the company are owned by short sellers, who are essentially investors who bet their money on the share price of the company going down. If that happens, the target for Musk will not be fulfilled. In the past seven months, with the rise in the share price of Tesla the shortseler shave reportedly lost more than $8 billion.

(Adapted from TheGuardian.com)

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