Tesla’s revenue has hit a critical milestone

Photo: Alexander Hassenstein/ Getty Images.
  • Tesla broke through the $US7 billion barrier in revenue for the fourth quarter of 2018.
  • Tesla’s revenue has been surging since mid-2018.
  • Tesla’s firehose of money has showed up at exactly the right time for the company to fund future expansion.

Tesla reported fourth-quarter and full-year 2018 earnings on Wednesday, and while the bottom line was a miss, the top line surpassed analysts’ expectations.

Tesla brought in $US7.23 billion in revenue, a record quarter for the company – and an important milestone. In the third quarter of 2018, revenue was just under $US7 billion, so crossing that mark is both symbolic and supportive of ongoing profits.

It’s no guarantee of profits, but Tesla finished last year with consecutive profitable quarters for the first time in its history. Rising revenue is a useful thing.

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This is what happens, of course, when you go from selling 100,000 vehicles year to selling nearly 250,000. From Tesla’s perspective, keeping revenue moving up in the future will depend on increasing both production levels and maintaining demand.

Neither are guaranteed. But the company is setting up to roll out a new, high-volume vehicle in the Model Y SUV. There should be good demand for the Model Y in the US, where SUV sales have surged in the past two years. Tesla has also been pricing the Model 3 in the neighbourhood of $US50,000. Model Y pricing should be similar initially, as Tesla builds itself into being the all-electric BMW.

Tesla has a lot on its plate for 2019 and 2020, and while it’s a positive that it finished 2018 with $US3.7 billion in cash – around $US3 billion more than it’s harbored in the past – what’s more important is that the firehose of cash has been created.