Tesla on Wednesday reported that it lost less money than the market expected and said it was making progress ramping up production of Model 3 electric cars.
Shares in the automaker rose briefly, then dove about five percent to $286.15 after an earnings call during which chief executive Elon Musk dismissed as “boring” some questions about money.
The automaker reported net losses of $784.6 million on revenue of $3.4 billion in the first three months of this year.
The adjusted loss per share was $3.35, against expectations of $3.42 on revenue of $3.32 billion.
The California-based firm said that it made “significant progress” in ramping up production of Model 3 vehicles considered key to its success in the mass market.
Prior to a planned shutdown of production to make the system more efficient, Tesla managed to reach 2,270 vehicles a week. That rate is still shy of a goal that Musk had set.
“We continue to target Model 3 production of approximately 5,000 per week in about two months, although our prior experience has demonstrated the difficulty of accurately forecasting specific production rates,” Musk said in an earnings letter to shareholders.
To achieve those Model 3 production numbers, Tesla will shut down its line again this quarter to make modifications, according to Musk.
Tesla expects to shut down production for about 10 days to clear out “bottlenecks” across the lines.
– ‘High time’ for profit -If improvements go to plan, Tesla could begin showing profit in the second half of this year, he said.
“It is high time we became profitable,” Musk said during an earnings call.
“The truth is, you are not a real company until you are. That is our focus right now.”
Investors and analysts have expressed worry about how fast Tesla has been burning through cash, and stopping losses would be a major step for the company.
“Our initial impression is mixed,” CFRA senior equity analyst Efraim Levy said in a note to investors about the earnings.
“Notably, reported free cash flow was less negative than we expected, but we remain concerned about cash.”
Tesla vowed to cut back projected expenses to just “critical needs” to get the Model 3 production line up to speed and turning a profit.
The Moody’s ratings agency early last month downgraded the company’s credit further into junk status, saying Tesla might run out of cash if it did not raise more than $2 billion.
– Battery bottleneck -“We have good visibility of our path to fully ramp and stabilize Model 3 production this year,” Musk said.
“The path to an electrified revolution is not easy, but what we’re trying to achieve is worth fighting for.”
Production bottlenecks have plagued the company, with much of its future banked on the Model 3, its first mid-price, mass-market vehicle.
Making battery packs fast enough has been identified as a bump on the road to cranking out more Tesla cars.
Musk said that the company’s northern California plant is “packed to the gills” and that later this year Tesla will decide where to build a second facility at which a new Model Y will be built.
Tesla will also announce a China location for a new “Gigafactory” that will produce batteries as well as vehicles, according to Musk.
“In the future, all Gigafactories will include vehicle production,” he said.
The continued struggle to ramp up production comes as Tesla is facing a federal investigation into a recent fatal crash involving Autopilot, its driver assistance system, and the voluntary recall of 123,000 Model S sedans announced last week.
During the call, Musk passionately defended the potential for self-driving cars to dramatically reduce accident fatalities and railed at the media for “inflammatory” headlines that could turn public opinion and regulators against the technology. DM
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