Tesla ups production and burns $739.5 million in cash on way to record 2Q loss
August 2, 2018 - Electric car maker Tesla Inc. burned through $739.5 million in cash last quarter, paving the way to a company record $717.5 million net loss as it cranked out more electric cars.
But CEO Elon Musk pledged to post net profits in future quarters, and on a conference call, he apologized to two analysts he cut off on the company's first-quarter call. Telsa's shares jumped 9.3 per cent to $328.85 in after-hours trading.
The net loss more than doubled from the same quarter a year ago, and was slightly larger than the first quarter. But Tesla's cash burn in the second quarter slowed from about $1.1 billion.
On the call, Musk also said he expects the company to avoid returning to the markets for capital and to be "essentially self-funding on a go-forward basis.'' Tesla would use money generated from sales to fund big projects such as an estimated $2 billion new factory in China and another plant in Europe, he said.
The company also said that Model 3 gross profit margins turned slightly positive during the quarter as it worked out expensive kinks in its manufacturing system.
In a statement released after the markets closed Wednesday, Tesla said it expects to produce 50,000 to 55,000 Model 3s in the third quarter, an increase of at least 75 per cent from the first quarter.
Tesla spent millions as it reached a goal of producing 5,000 Model 3 sedans per week by the end of June. It now says production is rising, with the goal of 6,000 per week by the end of August. The company said it expects to reach 10,000 Model 3s per week "sometime next year."
Musk said he expects the company to achieve sustained quarterly net profits from now on, barring an unforeseen event, supplier problems or economic downturn. He also said that production efficiencies should rise as more Model 3s are built, and he said that he expects to make to around 750,000 vehicles in calendar year 2020.
The company said it has cut back on capital spending by changing its strategy to produce the Model 3 on existing assembly lines – one in a giant tent – rather than adding all-new lines.
The Palo Alto, California, company said it lost $4.22 per share from April through June as revenue grew 43 per cent to just over $4 billion. Adjusted for stock-based compensation, the company lost $3.06 per share.
Tesla also said it's working on a new version of its Autopilot semi-autonomous software that will have greater safety features.
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