Tesla burns cash even faster as Musk seeks to calm investors
Tesla burns cash even faster as Musk seeks to calm investors
Model 3 production issues are burning through Tesla's cash
03 May, 2018, 16:56
Instead, Mr Musk took questions from YouTube vlogger and journalist Galileo Russell who was listening to the call. In the first quarter of the year, Tesla earned more money than ever before, with total revenues hitting a record of $3.4 billion.
And, as per a leaked email of Elon Musk to his employee, this high production objective is to be propelled by Tesla's Fremont, California, factory, which will be run round the clock to hit the production target spot on around the clock, according to the email that Elon Musk sent to employees. "Achieving that will depend significantly on whether the company can produce 5,000 "Model 3s" a week". The cash burn could put pressure on the company to borrow more or sell additional shares to raise more cash.
And when another analyst, Joseph Spak, of RBC, asked him about the next step for the new more reasonably priced Model 3 electric vehicle, there was a 14-second pause.
The CEO confirmed today that they started investing already, but capital expenditure related to Model Y is now low and it won't be significant until next year.
Amid all of those issues, the Model 3 is perhaps the most serious area of concern. Tesla said it was targeting a 5,000-a-week rate by the end of June, and anticipated turning the gross margin on the Model 3 from slightly negative to break-even by then. During Tesla'sQ3 2017 earnings call last November, Musk stated that having a factory in China is "really the only way to make cars affordable" in the country.
Tesla'scash balance dropped but the US-based electric vehicle automaker ended with $2.7 billion in cash.
"I think that if people are concerned about volatility, they should definitely not buy our stock", Musk replied.
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Musk warned the assembled up front: "We're going to go as long as there are good questions to answer".
"Yes, excessive automation at Tesla was a mistake", Musk tweeted at the time.
Tesla did not break out a cash flow calculation that it had included in previous quarters. But that didn't stop the eccentric gear head from upping his ultimate Model 3 production goal to 10,000 a week.
Tesla's revenue for the quarter rose to USD3.41 billion from USD2.70 billion a year ago.
Calling the call weird, Cowen & Co.'s Jeffrey Osborne, who has an Underperform rating on the shares, writes today in a note to clients that "Tesla's earnings calls have always been one of the best free sources of entertainment out there, but this one was the over top [sic]". A government report from January 2017, which has been widely criticized, found that Autopilot reduced crash rates for Tesla by 40%.
Net reservations, including configured orders that had not been delivered, "continued to exceed 450,000" at the end of the first quarter, the company said.
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However, they are not painting the entire Republican party with a broad brush because of the words and actions of the President. This, experts said posed a potential problem for Democrats who have come to count on millennials as a core constituency.
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