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Tesla's showroom in Washington, D.C. Photo: SAUL LOEB/AFP/Getty Images

Few people — except maybe Elon Musk himself — predicted Tesla's impressive third-quarter profit results, especially after the sideshow of the past three months.

Why it matters: This could be a turning point for Tesla. The operating improvements reported today suggest the company has the potential to buckle down and deliver sustained profits after losing money for much of its 15-year existence.

Driving the news: Today Tesla reported $312 million in third quarter net income and free cash flow of $881 million, only its third quarterly profit in history. And Musk says he expects continued positive cash flow and profits for all quarters going forward, except for occasional debt repayments.

"We do not intend to raise equity or debt, at least that’s ... our intention right now. That may change in the future."
— Elon Musk

The details: Deliveries of Model 3 took off after serious production bottlenecks, to a total of 56,065 units.

  • Labor hours per car dropped by 30%.
  • Better quality translated into less scrap, or waste, in the factory.

Flashback: Musk got into trouble in August with a tweet that he planned to take the publicly traded company private and had "funding secured." An SEC investigation resulted in $20 million fines for both Musk and the company, along with an agreement to bring in an independent chairman.

What's next: Musk stuck mostly to the script on Wednesday evening's analysts call, while sharing glimpses of the future:

  • He recently approved the prototype design for the Model Y crossover to start production in 2020.
  • Tesla continues to make progress on an electric semi-truck and new roadster.
  • He's most excited about plans for a Tesla pickup truck.
  • Tesla will operate its own ride-hailing business to compete with Uber and Lyft.
  • Aside from company-owned fleets, Tesla companies will be able to rent out their own cars for hire.
  • Tesla cars will get a more powerful computing chip to support self-driving capability starting in Q1. But Teslas can’t drive themselves until the software is ready. No word on when that will happen.

What we're watching: That long-promised $35,000 Tesla Model 3 remains a mystical unicorn. Perhaps March, or February, he says.

"If we could produce a $35,000 car today, we would do it."
— Elon Musk

Editor's note: This piece was corrected to show Musk says he expects future profits in all quarters going forward with the exception of occasional debt repayments.

Go deeper

55 mins ago - Politics & Policy

Manchin's massive means test

Illustration: Aïda Amer/Axios

Sen. Joe Manchin (D-W.Va.) is offering progressives a trade: He'll vote for their cherished social programs if they accept strict income caps for the recipients, people familiar with the matter tell Axios.

Why it matters: Manchin’s plan to use so-called means-testing for everything from paid family medical leave to elder and disabled care would drastically shrink the size and scope of the programs. It also would bring a key moderate vote to the progressive cause.

The China whisperer

Nick Burns. Photo: Chen Mengtong/China News Service via Getty Images

President Biden's nominee for ambassador to China will face aggressive questioning Wednesday about the most important, and potentially perilous, bilateral relationship in the world.

Why it matters: While Nick Burns is an experienced diplomat with support on both sides of the aisle, lawmakers want to use his confirmation hearing to force the administration into some tough positions on China.

Jan. 6 committee recommends contempt charges against Bannon

Steve Bannon. Photo: Stephanie Keith/Getty Images

The House select committee investigating the deadly Jan. 6 Capitol riots unanimously approved a resolution Tuesday night recommending that former Trump aide Steve Bannon be held in contempt of Congress for refusing to comply with a subpoena.

Why it matters: The resolution sets up a House vote to refer Bannon for potential criminal prosecution, signaling that the committee will not tolerate attempts by former President Trump and his associates to stymie the investigation.

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