Tesla Model Y is on the way -- in 2020

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Shares of Tesla fell 2% in after-hours trading. The electric vehicle maker reported a net profit of $139.5 million for the three months ending December 31, compared with a $311.5 million profit in the third quarter, a time when it benefited from government credits for electric auto purchases.

While the company came up short of analysts' estimates for fourth-quarter profit, it posted US$910 million in free cash flow.

Tesla also delivered its second consecutive quarterly profit, even if the final figure was slightly below market expectations. Musk pledged at the time it was a sign of more healthy earnings to come.

Tesla's production of the Model 3 has been rolling along steadily at more than 5,000 a week, but the company must now compete with lower-priced electric cars by rivals including Audi, as well as the reduced electric-car credits from the government. On Wednesday, the company sought to reassure investors that the manufacturing woes are over.

The company estimated that Model 3 production at its Freemont plant will rise to 7,000 cars, and its Shanghai factory will build 3,000 Model 3s weekly by year's end.

The company had already released fourth-quarter delivery figures of 90,700 vehicles - another new record for the company - which included 63,150 Model 3s.

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Earlier this month, Tesla announced layoffs impacting about 7% of its full-time workforce.

Chief Executive Officer Elon Musk said he sees higher demand for the Model 3, as the electric auto maker begins to ship cars to Europe and Asia from its Fremont, California factory.

The company said it plans to produce its Model 3 "at maximum production rates" this year.

The cheapest Model 3s are now selling for about $44,000, but Tesla has long promised to make a $35,000 version available. Investors keep a close eye on Tesla's cash stores because the company has hundreds of millions of dollars in debt payments due in the coming months. It ended the quarter with $4.3 billion (£3.3 billion) in cash and said it had "sufficient cash on hand" to pay a $920 million convertible bond maturing in March.

Tesla also said its optimistic target was to achieve a very small GAAP net income in the first quarter. The company warned its results from the current quarter will reflect a "one-time restructuring cost". Reads the letter further: "Additionally, this year we will start tooling for Model Y to achieve volume production by the end of 2020, most likely at Gigafactory 1".

To post a profit, Tesla will have to "successfully execute on many fronts including handling logistics and delivery challenges in Europe and China", the company said.

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