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Innovation By Design

Will Tesla Prove Its Innovative Car Business Can Be Profitable?

Its third-quarter 2016 earnings might hold the answer.

Will Tesla Prove Its Innovative Car Business Can Be Profitable?

[Photo: Flickr user Windell Oskay]

Tesla will report third-quarter 2016 earnings on Wednesday after the markets close, and the big question on everyone’s mind is whether the electric carmaker can prove it’s a real company. If CEO Elon Musk cannot demonstrate that his many innovations can be profitable, the novelty of Tesla’s vehicles is sure to wear off for investors—and shares are likely to spiral downward. Analysts are expecting average earnings of 6 cents per share on sales of $2.34 billion.

The company's desire to hit profitability is stacked against an ever-increasing litany of costs. Tesla is sinking money into three gargantuan projects that might derail its ability to make money on revenue this quarter: SolarCity, Model 3 production, and the Gigafactory. In addition to insight into Tesla’s moneymaking capabilities, we’ll be scanning its earning statement for updates on the following:

SolarCity: Tesla is merging with SolarCity, a solar energy company. Already the company is set to reveal a joint project: an energy-generating solar-panel car roof, as well as an integrated battery. We’ll want to know more about what the two companies can offer as one and what it will mean for Tesla’s overall bottom line.

The Model 3: Tesla is trying to ramp up production of its most affordable car. Though those who ordered the car back in the beginning of the year are on target to receive the Model 3 by the end of 2017; new orders aren’t expected to be delivered until the following year. To meet its stated goal of producing 500,000 vehicles in 2018, Tesla wants to double the size of its Fremont factory, according to the Los Angeles Times.

Gigafactory: The 5.8 million-square-foot battery manufacturing center in Nevada is projected to open its doors sometime in 2017. We’re looking for updates on its progress and if it will be ready in time for the first shipments of Model 3 cars.

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