Tesla says Model 3 electric sedan on track, but results back in red

Tesla says Model 3 electric sedan on track, but results back in red

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US EV and battery maker says mass-market Model 3 electric sedan on schedule to begin production in July.

Tesla CEO introduces the semi-autonomous Model X with enhanced radar in 2015. AP Photo/Marcio Jose Sanchez
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After surprising Wall Street in October with the company’s first net profit in more than three years, US electric vehicle and battery maker Tesla has returned to negative territory, delivering a loss for Q4 2016, while assuring that its much-anticipated mass-market Model 3 electric sedan remains on schedule to begin production this year.

Tesla CEO introduces the semi-autonomous Model X with enhanced radar in 2015. AP Photo/Marcio Jose Sanchez

In its first earnings call since buying Solar City – and since changing its name from Tesla Motors to just plain Tesla – the company reported a loss of 69 cents per share, down from a 14 cents per share profit in Q3. Operating cash flow also went into negative territory, showing a $0.45 billion cash outflow in the quarter.

Many analysts noted that revenue from customer deposits had also declined, falling $26.5 million quarter-on-quarter – a slump that was variously attributed to lower Model S and X orders, as well as Model X deliveries and possible cancellations.

But it was the Model 3 that analysts were most keen to hear about, and in an conference call on Thursday morning (Wednesday evening in the US), Musk said the company expected to begin manufacturing the mass-market model in July this year.

He said the company hoped to be making around 5,000 cars a week by the end of the year – ramping that up to 500,000 a year by the end of 2018.

The Model 3 – which has already chalked up a 400,000-customer waitlist, is Musk’s pitch at the mainstream EV market, with an expected ticket price of $US35,000. And Musk is banking on the fact that it will be cheap and easy to build.

“The Model 3 is really designed for manufacturing,” Musk told analysts, noting that it has only one screen, and fewer “bells and whistles” compared to its prestige cousins, the Model 3 and X, which have featured falcon-wing doors and self-presenting door handles.

Tesla understands manufacturing “a lot better than we did in the past,” Musk said. “Our goal is to be the best manufacturer on earth.”

He said that Tesla’s Gigafactory can support one million cars a year, plus storage needs (this quarter alone the company shipped 98MWh of battery products). And is still on track to deliver half a million cars by 2018 and one million by 2020.

On the subject of capital, Musk said it was a question of what was the risk tolerance of the company. “How close to the edge do we want to go?,” he said in the conference call. “We’re considering a number of options, but I think it probably makes sense to raise capital to reduce risk.”

The call also revealed a changing of the guard at the CFO level of the company, with relative new-comer Jason Wheeler leaving to enter the public sector, and his predecessor, Deepak Ahuja, returning to the role.

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  1. Ren Stimpy 4 years ago

    “leaving to enter the public sector” …from Tesla? Oh Mary that’s funny LOL, IOW he was a dumb mongrel climber who couldn’t be worked with, LOL f.o. and good riddance.

    • JonathanMaddox 4 years ago

      Probably going to help the administration dismantle the public sector.

      • Ren Stimpy 4 years ago

        Well I hope I have misjudged the guy and he’s going to limit the damage caused by the administration.

        • JonathanMaddox 4 years ago

          I hope so too. It’s hard to tell with Silicon Valley executive types. None are traditional conservatives, they’re all for disruption, but some are neoliberals, some are rabid small-government anti-PC libertarians while many are old-school liberals. There might even be a socialist or two in there, but they might keep a low profile.

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