Tesla Inc (NASDAQ:TSLA) surprised the investors with excellent Q3 results. The cost reductions, foreign exchange gains, and record volume of cheaper Model 3 cars helped Tesla to report solid profits in Q3 2019. Its revenues declined marginally in Q3 from $6.3 billion in Q2 2019 because of the shift towards cheaper models. Despite a decline in revenues, the company reported a profit in Q3.

Operating profit of Tesla at $261 million

The net income of Tesla has reached $150 million in Q3 2019, whereas its operating profits surged to $261 million. Deferred revenues of Tesla are estimated at $30 million on the backdrop of releasing self-driving feature ‘Smart Summon’ in the US. On account of cost reductions, its gross margins rose from 18.9% in Q 2019 to 22.8% in Q3 2019. Operating efficiencies and strong mix are the driving factors for Tesla to turn black. The company also reduced administrative and general expenses from $647 million in Q2 2019 to $596 million in Q3 2019.

Audacious goals of Musk helped turn black

Chairwoman of Tesla, Robyn Denholm, said the risk-taking behavior of Musk helped the company to make a turnaround. She said the quarterly production of the new Shanghai factory is 97,000 vehicles. Tesla completed the new factory in a record of ten months.

Musk set a target to complete in five years, which normally takes ten years to complete. The large goal helped every in the company to work hard and turn the company to black. Musk stepped down in November 2018 following a settlement with the SEC. Robyn replaced Musk on allegations over his infamous tweets, and said Tesla could enjoy tremendous growth opportunities in China. The company learned lessons after launching vehicles and production in China and the US.

Shares of Tesla surged over 20%

The shares of Tesla have surged over 20% after the market hours on Wednesday and closed at $299.68, an increase of 17.67%, on Thursday after reporting surprising profits. Tesla would launch the Model Y crossover before the scheduled date. Ron Baron, the founder of Baron Capital, said the collective efforts of the team at Tesla are responsible for surprising profits.