Tesla has surprised shareholders with a third quarter profit that sent its shares soaring in the global stock markets. Chief Executive Elon Musk promised a 2020 rollout of a cheaper SUV and more self-driving technology to stay ahead of larger rivals rushing into the premium electric vehicle market.

Tesla posted a cash balance increase to $5.3 billion and reported a profit of $1.86 per share, shattering analyst expectations for a loss of 42 cents per share. Shares rose nearly 21% to $307.12, crossing $300 for the first time since March 1 after record deliveries and cost cuts ensured a profitable third quarter.

The third-quarter results are an important milestone for Tesla and redemption for Musk who had to step down as chairman after a series of scandals and investor doubts about Tesla’s ability to withstand competition from larger, better capitalised global rivals.

Tesla’s gross margins, an important profit indicator for investors, surpassed expectations and Tesla said it was “highly confident” in exceeding the low end of its yearly global vehicle delivery goal. But Tesla has yet to prove that it can be consistently profitable while managing the start of production for Model 3 sedans at its new factory in Shanghai and for Model Y sport utilities next year.

“Given the breakneck speed of expansion, Tesla will face significant demands on its cash pile,” said Nicholas Hyett, an analyst at Hargreaves Lansdown.

The company on Wednesday said production in Shanghai and for Model Y are ahead of schedule, with the latter expected to launch by the summer of 2020.

Tesla also has to contain costs as it develops a gigafactory in Europe, a Semi truck, an electric pickup truck, a new generation of the Tesla Roadster and automated driving features.

Reuters