‘3’ DEGREE BURN
Sedan’s woes are turning Tesla’s cash to ash
Tesla’s stops and starts in missing its quarterly production goals for its flagship Model 3 sedan are persisting, despite reassurances to investors it was on pace to crank out 5,000 vehicles a week by July.
However, the cash burn rate raged to $1 billion, from $277 million during the previous quarter, pushing shares down 5 percent, to $287, in extended trading.
The electric-car maker is currently maxed out at 2,270 Model 3s a week, short of the 2,500 Chief Executive Elon Musk promised would be produced weekly by the end of the quarter. But that didn’t stop the eccentric gear head from upping his ultimate Model 3 production goal to 10,000 a week.
“It’s not like brain surgery to get these things right,” Musk said on a conference call. “It’s just a lot of time and hard work. It’s very doable.”
Despite the miss, the company posted an earnings report that beat Wall Street’s expectations thanks to a strong showing from its battery and solar panel business.
Tesla reported a loss of $3.35 per share, beating analysts’ forecast of $3.58 per share. The company also pulled in $3.41 billion in revenue, surpassing the $3.22 billion expected by The Street.
Sales of batteries and solar panels clocked in at $410 million, 92 percent more than the year-earlier $214 million. The company ended the quarter with a cash balance of $2.67 billion.
Tesla said it expects to achieve profitability in the second half of the year, as long as it executes “according to our plans.”
“This is primarily based on our ability to reach Model 3 production volume of 5,000 units per week,” Musk wrote in a statement.
Last month, Musk admitted that the production snags on the Model 3 assembly line are partly the result of “excessive automation” at the company’s Fremont, Calif., factory.
“Yes, excessive automation at Tesla was a mistake,” Musk tweeted at the time. “To be precise, my mistake. Humans are underrated.”
He elaborated on this point Wednesday, explaining part of the delay was caused by a robot, which was designed to install sound-buffering materials on the Model 3’s battery pack.
“Machines are not good at picking up pieces of fluff,” Musk said. “Hands are way better at that.”
Tesla’s reputation remains scarred following a fiery March 23 crash of a Model X outside San Francisco, in which the driver died after hitting a concrete median while in autopilot mode.
Musk blasted the National Transportation Safety Board’s investigation of the crash, accusing the regulatory body of being “more concerned with press headlines than actually promoting safety.”
On the call, Musk chastised the media for its coverage of the accident, citing statistics that show autonomous cars are safer than traditional vehicles.
“They shouldn’t really be writing this story,” Musk said. “It’s incredibly irresponsible of any journalist with integrity to write an article to lead people to believe Tesla autopilot is less safe because people might turn it off and then die.”