Elon Musk Taps Brakes on Tesla's Model Y After 3's 'Production Hell'
03 May, 2018, 14:21
The electric carmaker posted its latest earnings results Wednesday, and the filings show Tesla's money stockpile shrank from $3.4 billion to $2.7 billion the first three months of 2018. Strong sales of the vehicle are key to generating cash to pay operating expenses, fund capital spending and make upcoming debt payments.
"They're killing me", Musk said, before pivoting to take questions from a Tesla enthusiast and Youtuber named Gali Russell.
The reason why the production levels of the Model 3 matter is because Tesla needs a mass-market success.
It also expects full profitability in those quarters under generally accepted accounting principles. "Achieving that will depend significantly on whether the company can produce 5,000 "Model 3s" a week".
And, as per a leaked email of Elon Musk to his employee, this high production objective is to be propelled by Tesla's Fremont, California, factory, which will be run round the clock to hit the production target spot on around the clock, according to the email that Elon Musk sent to employees. This is on top of four to five days in April.
He admitted that Tesla made a mistake by adding too much automation too quickly at the factory.
-Correction: A previous version of this story misstated the amount of Tesla's cash burn last quarter. Excluding one-time expenses such as stock-based compensation, the company lost $3.35 per share. The business had revenue of $3.41 billion for the quarter, compared to analysts' expectations of $3.30 billion.
The giant loss in a critical quarter for the 15-year-old company beat Wall Street estimates. Analysts polled by FactSet expected an adjusted loss of $3.54 per share.
Moody's Investor Service downgraded Tesla's debt into junk territory back in March, warning at the time that Tesla didn't have cash to cover $3.7 billion for normal operations, capital expenses and debt that come due early next year. "I'm expecting towards the end of this year", he said.
Tesla Inc., which has had only two profitable quarters in its almost eight years as a public company.
Elon Musk's company is continuing to haemorrhage cash at an alarming rate, reporting overall losses of $784.6 million or $4.19 per share in the first part of the year, despite posting a record revenue of $3.4 billion. What's more, Musk stated that all future Gigafactories would support the manufacture of the company's vehicles. Toni Sacconaghi of Sanford C. Bernstein, who rates the company the equivalent of a hold, bore the brunt of Musk's sharpest words after asking about capital requirements.
The company stood by a previously announced target of building 5,000 Model 3s per week by the end of June. As it turned out, just under 9,800 were assembled from January through March, Tesla said in April. "(But) we've had a radical improvement in tackling production. The electric vehicle producer reported ($3.35) earnings per share (EPS) for the quarter, missing analysts' consensus estimates of ($2.40) by ($0.95).
On Wednesday, the tracker estimated Tesla has hit 2,050 Model 3's per week. At one point it had more than 500,000 potential buyers on a waiting list. Tesla said reservations "remained stable" through the first quarter.
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