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Tesla Swings to $671M loss on Model 3 Delays

02 November, 2017, 01:09 | Author: Kristen Ingram
  • The hybrid powertrain on the Polestar 1. Future models will be entirely electric powered     Volvo

"While we continue to make significant progress each week in fixing Model 3 bottlenecks, the nature of manufacturing challenges during a ramp such as this makes it hard to predict exactly how long it will take for all bottlenecks to be cleared or when new ones will appear", Tesla said in the letter.

Meanwhile, the production ramp-up has been expensive, pushing Tesla to its worst-ever quarterly loss in the third quarter, at $619 million.

Tesla, Inc. (NASDAQ:TSLA) last session's volume of 5.64 million shares was lower than its average volume of 5.76 million shares. However Tesla plans to produce about 10 percent fewer cars of both models in the fourth quarter as more resources shift toward Model 3. It saw a profit of $21.9m a year earlier. The company's revenue for the quarter was up 119.6% compared to the same quarter past year.

Although Tesla has made inroads among luxury auto buyers with the advanced technology and innovative design in its Model S sedan and Model X SUV, it is the Model 3 on which its long-term viability rests. Tesla said in October that it produced only 260 vehicles, well below its target of 1,500. Can raised its stake in Tesla by 2.7% in the 2nd quarter. Tesla said there are no issues with its supply chain. "I really believe that one should lead from the front lines".

In a letter to investors, the company said it expects to be able to produce 5,000 Model 3 vehicles per week by late in the first quarter of next year.

The question facing the company now is whether the production issues will bother anyone outside of the industry observers who track the company's every movement.

The sluggish rollout of the Model 3 hasn't been due to a lack of demand.

Tesla CEO Elon Musk had promised that the Model 3, which has more than 500,000 potential buyers on its waiting list, would be simpler to make than Tesla's previous vehicles and not plagued with the same delays.

Tesla's continued need for cash is exacerbated by Musk's insistence on vertical integration, such as making its own batteries and selling cars directly to customers.

A number of other equities research analysts have also weighed in on TSLA. Financial results, he argued, mean little when analyzing the long-term prospects of a company that is creating a new industry. "They are learning from their failures and they're very quick to overcome them".

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