Tesla shares jump despite its big spending

TESLA managed to stem the rate at which it burned through cash in its latest quarter, despite ramping up production of its Model 3 sedan significantly in the three-month period following months of delays.

Shares in the electric carmaker jumped 10pc in after-hours trading last night after Tesla said it could be sustainably profitable by the end of the year. It reported a loss of $742m (£565m) for the three months to June 30, slightly down on its previous numbers. However, revenues rose to $4bn in the three months to June 30, up from $2.7bn, and its negative free cash flow came in at around $160m below analyst expectations, at $740m, as it burned much less cash than in recent quarters.

Tesla ended the second quarter with $2.2bn in cash, and said it expects this to grow in both its third and fourth quarters. Going into the results analysts had suggested it would need to raise additional funds before the end of the year, given its investment in production, with some predicting it would need up to $3bn.

However, boss Elon Musk has repeatedly denied this, and on Wednesday, the company said it could become cash flow positive and “sustainably profitable” before the end of 2018.

“We will not be raising any equity at any point. I have no expectations to do so,” Mr Musk said.

The electric car company has battled to build up production levels of its first mass production car, the Model 3, to 5,000 a week with an ultimate target of producing 10,000 cars per week.

The company said it was now producing “roughly” 7,000 cars in total during the final week of June, which Mr Musk called “an amazing jump from only a year ago when we were producing 2,000 vehicles a week. It’s a mindblowing leap forward for a manufacturing company.”