Model 3 Delays Create Losses for Tesla

Model 3 Delays Create Losses for Tesla

Model 3 Delays Create Losses for Tesla

It also deferred some Model 3-related capital expenditures in the fourth quarter, which "dressed up the cash flow", Cowen's Osborne said. Yet the quarterly revenues have been dismally low which is indeed quite a blow to the otherwise successful company's reputation. In early January, Tesla reported good delivery numbers for Model S and Model X vehicles, and certainly Tesla's energy business seems healthy (Tesla installed 143 MWh of battery storage in Q4 2017, not counting its massive installation in South Australia).

A day after launching one of its cars into space, Tesla moved Wednesday to ease concerns on Earth over production delays for its Model 3, the key to future growth for the star electric carmaker.

CEO Elon Musk's rocket venture is making major strides in space, but his auto company is struggling to find profits on the ground.

"I am cautiously optimistic that we will be GAAP profitable, with no asterisk" in 2018, he said.

In conclusion, Tesla said its long-term competitive advantage will be the factory, not the vehicle, and its 1 million unit target for 2020 is still in play, it said.

"It is important to note that while these are the levels we are focused on hitting and we have plans in place to achieve them, our prior experience on the Model 3 ramp has demonstrated the difficulty of accurately forecasting specific production rates at specific points in time", the letter noted.

Manufacturing setbacks had been limiting the amount of money coming in from customers taking delivery of Model 3s, the linchpin in Musk's master plan to bring electric cars to the masses.

Tesla, Inc. (NASDAQ:TSLA) [Trend Analysis] attempts to attain leading position in street, Shares price changes as it -1.88% to close at $338.52 with the total traded volume of 2.13 Million shares.

The agreement will allow Tesla to set up a factory in China without having to partner with a local manufacturer, a first for any global automaker.

During the fourth quarter, the overall reservations for the new model were pretty much on a par. Tesla made only 2,425 units of Model 3 in the December quarter of 2017.

The Model 3, priced starting at $35,000 (roughly Rs. 22.51 lakhs), is key to Tesla's effort to becoming a mass producer and reshaping the automotive market. Tesla said production will be constrained by the supply of cells with the old 18650 form factor.

Tesla delivered 1,542 Model 3 vehicles in the quarter, barely making a dent in the reservation list for the new auto, as it faced production delays. Tesla plans to adjust its mix of available options to maximize margins.

But obstacles to production of 5,000 vehicles by the end of the second quarter "were getting smaller with every week", Musk told analysts on a conference call.

Tesla said it posted a loss of $675 million, or $4.01 per share, in the latest quarter, its biggest loss ever.

Evan Niu, CFA owns shares of Tesla.

After adjusting for one-time items, the company lost $513 million, or $3.04 per share. "Due to the success of this project, we're seeing an increase in demand for Powerpack, our commercial energy storage product".

Tesla opened 12 new store and service locations, for a total of 330 locations around the world at the end of 2017. Along with the company's Destination Chargers, Tesla increased charging capacity by over 90 percent.

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