Tesla made what local analysts are calling an impressive turnaround by reporting its first profitable quarter in two years, as it rides the continued popularity of its Model 3 electric car.

Elon Musk, Tesla’s CEO, said Wednesday that the company had “a historic quarter.” He promised in July that Tesla would turn a profit by ramping up production of its Model 3 sedan.  

The company still has not had a profitable year in its 15-year history.

Most of the hour-long investors call Wednesday focused on Tesla’s cars, when it will begin manufacturing a $35,000 model to appeal to the masses and its moved-up timeline to begin manufacturing cars in China by next year.

In fact, Musk and his team barely mentioned the solar panel manufacturing side of the business during the earnings call nor did the Tesla team discuss its plant in Buffalo at Riverbend, known locally as Solar City.

The sprawling facility built and equipped with $750 million in taxpayer funds is the centerpiece of Gov. Andrew Cuomo’s Buffalo Billion economic development program.

Musk said in a letter to investors that Tesla still has not settled on the design and installation process of its solar roof made at the Buffalo plant.

In July, Musk said Tesla was still testing the product’s safety and durability in comparison to a traditional shingled roof, but that they would be ramping up production this year. That is not the case anymore.

The engineering problems Tesla is having with the solar roof means it will not reach the ramp-up pace promised for this year, especially with a slow winter season approaching.

“Accordingly, we expect to ramp production more quickly during the first half of 2019,” Musk states in the letter.

The deal with New York state requires Tesla to employ 1,460 workers in Buffalo by April 2020. After 10 years, the company must employ 5,000 workers in the state. Missing those milestones would result in penalties of $41.2 million each year Tesla must pay to the state.

State officials said in August that Tesla is in compliance with the job creation goals; some 600 employees work at the plant – a combined total of employees of both Tesla and Panasonic, who manufactures solar cells and modules at the Buffalo facility.

For this past quarter, Tesla reported an 11-percent increase in the megawatts of solar energy systems it deployed. Company officials said they are prioritizing solar installations that are combined with its energy storage Powerwall manufactured in Nevada “because the combination provides a better customer experience and improved both our revenues and profits.”

“As far as the solar side of the business, the report indicates that profits margins improved for the quarter,” said Kathleen Nesper, a professor at the University at Buffalo School of Management and a certified public accountant.

“During the previous quarterly news conference, they cited a strategy of increasing automation and production cost improvements in its plants. It remains to be seen if that strategy will translate into lower manpower needs, particularly in Buffalo.”

Tesla’s $312 million profit was the big news that surprised local analysts, who told News 4 Investigates in July that Tesla’s financial woes could begin to scare off investors.

The news is a small sign that its long history of hemorrhaging cash may be over. Its after-hours stock price closed Wednesday with a 10.6 percent increase.

“Tesla’s focus on the ramp-up of the Model 3 production in the 3rd quarter paid off,” Nesper said.

The good news for Tesla comes after a series of scandals involving Musk.

In September, a settlement with the Securities and Exchange Commission forced Musk to relinquish his chairman role on Tesla’s board for three years and pay a $20 million fine. The SEC probe and settlement was over an Aug. 7 tweet by Musk that he was considering taking the company private.

In addition, Musk faced more criticism and skepticism after a video surfaced of him smoking a marijuana joint during comedian Joe Rogan’s podcast.

Those scandals seemed to have been erased with Wednesday’s upbeat earnings call.

“The timing to turn a big profit could not have been better as the pressure was on, and Tesla needs the positive cash flow to service their debt and further improve their manufacturing efficiency,” said Steven Elwell, vice president of Level Financial Advisors in Amherst.

This all should be a positive for Tesla’s ability to reinvest in Solar City.”

The success of the vehicle side of Tesla’s business is clearly the pathway to profitability, analysts said.

Tesla produced 5,300 Model 3 vehicles in the final week of this past quarter. It averaged about 4,300 Model 3s per week, which is still shy of Musk promise of 7,000 per week by the end of this year.

“It’s hard to not be impressed with that result,” said Steven Elwell, vice president of Level Financial Advisors in Amherst.  “They sold a lot of Model 3s and actually turned a profit doing it.”

 Musk said Tesla will “significantly increase the affordability” of the Model 3 by accelerating its manufacturing timeline for a facility in China this coming year.

“If they maintain production rates and vehicle sales remain strong, profits should remain positive on the vehicle side,” Nesper said.

“It will also depend on if the company introduces a smaller, lower price-point Y Model. Usually, the smaller cars have lower gross margins.”