Economy

Tesla flags promise of profit as Model 3 production steadies

Tesla flags promise of profit as Model 3 production steadies”

But its cash burn extended a money-losing streak for chief Elon Musk during one of the company's most challenging years in history.

Last quarter, the company reported about $3.4 billion in total revenue (automotive and energy combined) and a non-GAAP share loss of $3.35 per share. On an adjusted basis, Tesla lost $3.06 per share, missing the consensus estimate of $2.92.

Several analysts had predicted a widening loss for Tesla.

The company said that it had met its stated goal of manufacturing 5,000 Model 3s in a week multiple times in July, adding that it hoped to stick to its stated target of making 6,000 per week by the end of August. It delivered its 200,000th electric auto - including its more expensive Model S and X vehicles - in July, a threshold which means a $7,500 federal subsidy begins to phase out two quarters after that milestone was reached.

Mr Musk said he remained confident of delivering on the promise of turning a profit in the second half of the year: "Our goal is to be profitable and cash-flow positive for every quarter going forward".

This time, Musk said there was no excuse for bad manners and blamed his previous attitude on a lack of sleep due to the long hours he was working.

Tesla ended the second quarter with $2.78 billion in cash after spending $610 million in capital expenses. To achieve 55,000 deliveries in the second quarter would require an average of more than 4,200 units per week. Ultimately, the electric vehicle manufacturer wants to see its factories churning out 10,000 units per week by the end of this year, doubling the current rate of production. It also said that Model 3 gross margins would "grow significantly" to about 15% this quarter and 20% in the last three months of the year.

Contrition pays off - just ask Elon Musk.

Tesla stock climbed as much as 5.7 per cent to US$317.95 as of 5 p.m.in NY. The stock has slumped 19 per cent since a 2018 high of $370.73 in June.

Now that Tesla pulled off that rate of output at the end of June, it's reviving the goal to make 10,000 a week sometime in 2019.

FILE PHOTO: A man walks near a logo of Tesla outside its China headquarters at China Central Mall in Beijing, China July 11, 2018.

Tesla's full letter to shareholders can be viewed over here. Tesla is going to be an incredible company over the next five years. Automotive gross margin increased to 20.6% GAAP up from 19.7% in the previous quarter which means Tesla makes more money from every vehicle it sells than it did before.



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