Despite losses, Tesla reports $2.79 billion in total revenue
Focus remains on production, delivery of Model 3.
The electric-car maker Tesla reported Wednesday that its losses widened in the second quarter as it continued to invest in factories to accommodate the introduction of its first mass-market vehicle.
Tesla said it lost $401.4 million in the quarter that ended June 30, compared with a loss of $293.2 million in the same period in 2016.
The company also reported overall growth in its operations, which includes its automotive business and its solarpanel division.
Tesla said its total revenues for the quarter were $2.79 billion, more than double the $1.27 billion it recorded in the comparable period last year.
Revenues from the company’s auto operations were $2.29 billion, compared with $1.18 billion a year earlier.
Tesla shares were up more than 5 percent in extended trading after the earnings report.
While Tesla posted stronger sales of its existing vehicles — the Model S sedan and Model X SUV — the biggest challenge it faces is preparing for the introduction of the Model 3, the company’s first foray into the mass market, with prices starting at $35,000.
The company has consistently lost money because of heavy spending on research, product development and equipment for its assembly plant in California and its battery factory in Nevada.
Elon Musk, a founder of the company and its chief executive, has said Tesla is earning good margins on the small number of Model S sedans and Model X SUVs it has sold.
But while sales are rising, the per-car profits are not nearly substantial enough to cover Tesla’s high investment costs.
Tesla’s best hope for improving its financial results is to produce a steady flow of new Model 3 vehicles for delivery to customers later this year.
Interest in the Model 3 has been huge since Tesla began taking $1,000 deposits on it more than a year ago.
At an event Friday where the first 30 vehicles were delivered to their new owners — all of them Tesla employees — Musk said that more than 500,000 prospective buyers had put down deposits.
“We are going to do everything we can to make cars as fast as we can,” he said. “Demand is not a challenge here.”
Tesla produced about 25,000 cars in the second quarter, which translates to an annual rate of 100,000. But Musk reiterated Friday that the company still hoped to produce 500,000 cars next year.
Industry analysts have been hesitant to express doubts about Musk, mostly because Tesla has already defied expectations for a startup automaker.
But investors are scrutinizing how quickly the company can accelerate production to begin delivering a significant number of Model 3s to buyers this year.
Musk’s widely reported comment last week that Tesla faces six months of “manufacturing hell” has caused some analysts to question whether the company can meet its aggressive targets.
“This of course raises questions about Tesla’s broader ability to scale not just its manufacturing, but the entire supporting infrastructure,” said Clement Thibault, an analyst with the website investing.com.
The first Model 3s to be built will primarily be more expensive variations, at $44,000, equipped with longer-range battery packs and autopilot features that enable the cars to be driven primarily by computer. Tesla will then add production of the baseprice version.
The higher-priced, optionladen versions could generate better profit margins.
Tesla is also gaining some ground in the marketplace. The company reported that sales of the Model S and Model X in the United States totaled 3,100 vehicles in July, and it said that overall sales for the first seven months of the year had increased by 35 percent over the same period in 2016.
“The transition of the more than one-billion-unit analog headset market to digitally connected products continues to gain momentum as (manufacturers) push to innovate beyond mobile phones,” Rhode said in the shareholder letter.
He said the company is “actively working” on ing and shipping jobs at Amazon will be full time. Most of them will count toward Amazon’s previously announced goal of adding 100,000 fulltime workers by the middle of next year.
The bad news is that more people are likely to lose jobs in stores than get jobs in warehouses, said Anthony Carnevale, director of Georgetown University’s Center on Education and the Workforce.
On the flip side, Amazon’s warehouse jobs provide “decent and competitive” wages and could help build skills.
“Interpersonal teamwork, problem solving, critical thinking, all that stuff goes on in these warehouses,” Carnevale said. “They’re serious entrylevel jobs for a lot of young people, even those who are still making their way through school.”
The company is advertising starting wages that range from $11.50 an hour in Chattanooga, Tennessee, to $13.75 an hour in Kent, Washington, near Amazon’s Seattle headquarters. The $11.50 rate amounts to about $23,920 a year. In Washington state, the current minimum wage is $11.50 but by 2020 will increase to $13.50. By comparison, the warehouse store operator Costco raised its minimum wage for entrylevel workers last year from $13 to $13.50 an hour.
Some job candidates Wednesday were looking to supplement other income.
Rodney Huffman, a 27-yearold personal trainer, said the $13-an-hour job in Baltimore would pay enough to help cover bills while he starts his own company.
“I’m looking to do the night shifts and then run my own company during the day,” he said.
At one warehouse — Amazon calls them “fulfillment centers” — in Fall River, Massachusetts, Amazon was looking to hire more than 200 people Wednesday, adding designs with customers “across all headset form factors,” including wire and wireless. And during a conference call with analysts, Rhode said Cirrus is targeting premium headphone products and customers.
The company reported profit of $42.9 million, or 64 cents a share. But when adjusted for certain one-time costs and gains, the company reported $54.6 million, or 88 cents a share, which is significantly to a workforce of about 1,500. Employees there focus on sorting, labeling and shipping what the company calls “nonsortable” items — big products such as shovels, kayaks, surfboards, grills, car seats — and lots of giant diaper boxes. Other warehouses are focused on smaller products.
While Amazon has attracted attention for deploying robots at some of its warehouses, experts said it could take a while before automation begins to seriously bite into its growing labor force.
“When it comes to dexterity, machines aren’t really great at it,” said Jason Roberts, head of technology and analytics for mass recruiter Randstad Sourceright, which is not working with Amazon on its jobs fair. “The picker-packer role is something humans do way better than machines right now.”
Steve King, 47, a job candidate in Fall River with experience running his own business, agreed: “I don’t think robots are up to snuff yet. I think they will be. Hopefully I can get in before the robots get that good and get above the robots in administration or something.”
In recent years, reports have emerged about difficult working conditions at Amazon’s warehouses, including deaths at two Amazon warehouses in 2014. The company also came under fire in 2011 for extreme heat at its warehouses that caused “heat-related injuries” among workers. Amazon said at the time that it took emergency actions during heat waves and subsequently installed cooling systems in its warehouses.
But many of those who showed up Wednesday were excited by the prospects of health insurance and other benefits, as well as advancement opportunities.
“I like to be busy, so I know Amazon is busy and they want hard workers,” retired police Officer Brian Trice said.
Trice was among those who stood in line in Baltimore on a hot day as Amazon contractors passed out bottles of water. In better than analysts were expecting.
The company employs about 1,450 people worldwide, with more than 600 in Austin.
Cirrus Logic’s shares closed Wednesday at $63.37, a slight increase from the day before. The company’s stock is up 10 percent since the start of the year. Fall River, a line snaked out of the warehouse and under an air-conditioned tent. In Kent, Washington, a vendor offered free cups of shaved ice from a truck playing steeldrum music.
Among those lining up in Kent were 18-year-old Javier Costa and his 49-year-old uncle, Manuel Alvarenga. Costa said the warehouse work wasn’t necessarily what he was looking for, but his uncle, a recent immigrant from El Salvador, was looking for whatever he could get.
“He was making $6 an hour in El Salvador; you can imagine what the people below him were making,” Costa said. “It’s a harder life down there. At this point he just needs a job.”
Ron Joslin, 55, said he’s long worked at call centers, most recently making medical appointments for veterans. But he lost that job in April, and since then hasn’t been able to find work — despite the Seattle area’s hot labor market.
“I don’t believe the numbers reflect what’s really happening,” he said, waiting in a line hundreds of people long. “You want to see what’s really happening, go to the unemployment office and see how many people are there and how long they’ve been unemployed.”
Some left disappointed. Maureen Schell gave up after several hours at the Fall River site, describing it as a publicity stunt and a “drive to get bodies in the door so they can cherry-pick the warehouse staff they want.”
“It looks like they’re looking for young, healthy warehouse staff only,” said Schell, a 57-year-old searching for work that will put more money into her retirement.
Austin’s Cirrus Logic provides audio and voice chips for the Apple iPhone. Its other customers include Motorola, Samsung and Sony. About 1,450 people work for the company, more than 600 of them in Austin.