Tesla has assured investors its highly anticipated Model 3 saloon is on track to begin production, mitigating concerns that the car maker led by Elon Musk is burning through more cash to bring the vehicle to market.
Cash burn was the second most in the company’s history, behind only the final period of last year, at US$622.4 million – about half the amount raised in equity and debt offerings this year. The company expects to approximately triple capital expenditures in the second quarter compared with the first three months. Tesla’s first-quarter loss widened 17 per cent to $330m as it boosted spending ahead of the launch of the Model 3 and its solar panel business.
The loss equalled $2.04 per share, compared to a loss of 78 cents a year ago. Excluding one-time items, Tesla reported a loss of $1.33 per share, which was bigger than Wall Street expected. Analysts polled by FactSet forecast a loss of $1.23 per share.
However, revenue more than doubled to $2.7 billion from $1.15bn as Tesla delivered more vehicles in the quarter.
Tesla said it remains on track to start production of the Model 3 in July. The company’s desire to move beyond its current position as a niche maker of luxury cars largely rests on the Model 3. The lower-cost car, which will start around $35,000, is set to go on sale later this year. Tesla said it is preparing its factory in Fremont, California, to produce 5,000 Model 3s per week sometime before the end of 2017 and 10,000 per week at some point in 2018.
It is also expanding its network of stores and charging stations to meet anticipated demand. Tesla said it plans to open 100 retail and service locations worldwide this year, including its first stores in Dubai and South Korea. It also plans to double the number of fast-charging Supercharger stations to 10,000.
The Model 3 remains on schedule for output to start in July, Tesla said Wednesday as it reported first-quarter earnings results in a letter to shareholders. Excluding some items, Tesla lost $1.33 a share, a bigger deficit than analysts estimated. Cash burn was the second most in the company’s history, behind only the final period of last year.
Mr Musk has flagged plans to spend heavily during the first half of this year to bring out Tesla’s most affordable car to date. Keeping the saloon’s arrival on course is essential to supporting Tesla’s high-flying share price, which vaulted the company’s valuation past the much larger and profitable General Motors and Ford last month.
“All eyes are on the Model 3, and reaffirming the July guidance is great,” said Joe Dennison, an associate portfolio manager of Zevenbergen Capital Investments in Seattle. “We’re at an inflection point where we’ll see just how big of a company Tesla may ultimately be.”
* Agencies
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