Please ensure Javascript is enabled for purposes of website accessibility
Tesla Burns $739.5 Million in Cash on Way to Record Loss
gvw_ap_news
By Associated Press
Published 7 years ago on
August 2, 2018

Share

Electric car maker Tesla Inc. burned through $739.5 million in cash last quarter, paving the way to a company record $717.5 million net loss as it cranked out more electric cars.
But CEO Elon Musk pledged to post net profits in future quarters, and on a conference call, he apologized to two analysts he cut off on the company’s first-quarter call. Telsa’s shares jumped 9.3 percent to $328.85 in after-hours trading.
The net loss more than doubled from the same quarter a year ago, and was slightly larger than the first quarter. But Tesla’s cash burn in the second quarter slowed from about $1.1 billion.
On the call, Musk also said he expects the company to avoid returning to the markets for capital and to be “essentially self-funding on a go-forward basis.” Tesla would use money generated from sales to fund big projects such as an estimated $2 billion new factory in China and another plant in Europe, he said.

Slight Burst of Positivity

The company also said that Model 3 gross profit margins turned slightly positive during the quarter as it worked out expensive kinks in its manufacturing system.
Last quarter, Musk mistreated two analysts by calling their queries about the company’s cash needs and Model 3 orders “so dry” and “not cool.” The call triggered a stock sell-off and raised questions about Musk’s behavior.
But on Wednesday, a contrite Musk apologized to both and said he was tired from working more than 110 hours per week last quarter. “It’s not right,” he told an analyst from RBC Capital Markets. “Hope you accept my apologies.”
In a statement released after the markets closed Wednesday, Tesla said it expects to produce 50,000 to 55,000 Model 3s in the third quarter, an increase of at least 75 percent from the first quarter.
Tesla spent millions as it reached a goal of producing 5,000 Model 3 sedans per week by the end of June. It now says production is rising, with the goal of 6,000 per week by the end of August. The company said it expects to reach 10,000 Model 3s per week “sometime next year.”
Cash from selling the Model 3, which starts at $35,000 but runs far higher with options, is key to holding off more borrowing and turning a profit.
Tesla’s cash balance fell to $2.2 billion in June, from $2.7 billion in the first quarter.

Musk Stays Hopeful for the Future

Musk said he expects the company to achieve sustained quarterly net profits from now on, barring an unforeseen event, supplier problems or economic downturn. He also said that production efficiencies should rise as more Model 3s are built, and he said that he expects to make to around 750,000 vehicles in calendar year 2020.
The company said it has cut back on capital spending by changing its strategy to produce the Model 3 on existing assembly lines, one in a giant tent, rather than adding all-new lines. Tesla projected total 2018 capital spending at just below $2.5 billion. That’s substantially less than the 2017 level of $3.4 billion.
The Palo Alto, California, company said it lost $4.22 per share from April through June as revenue grew 43 percent to just over $4 billion. Adjusted for stock-based compensation, the company lost $3.06 per share. That was worse than Wall Street estimates. Analysts polled by FactSet expected a $2.88 loss per share.
Tesla also said it’s working on a new version of its Autopilot semi-autonomous software that will have greater safety features.
During the second quarter, Tesla laid off 9 percent of its workforce as it worked toward Musk’s promise of making money. The company has never turned an annual profit and has had only two profitable quarters since becoming public in 2010. Tesla has also asked parts suppliers for refunds.

DON'T MISS

Kash Patel Plans to Move Up to 1,500 Workers Out of Washington

DON'T MISS

Fired Employees Fear Beloved Yosemite National Park Will Lose Its Luster

DON'T MISS

US and Ukraine Nearing Rare Earths Deal That Would Tighten Relationship

DON'T MISS

Trump Fires Chairman of the Joint Chiefs of Staff and Two Other Military Officers

DON'T MISS

Less Is More: 5 Ingredient Dinners Are Easier Than You Think

DON'T MISS

Trump-Putin Summit Preparations Are Underway, Russia Says

DON'T MISS

Warren Buffett Offers Trump Some Advice While Celebrating Berkshire’s Success

DON'T MISS

Hungarians Will Decide Whether Ukraine Can Join the European Union, Orbán Says

DON'T MISS

Wolfie the Handsome Pup Seeks Loving Home After Life in the Wild

DON'T MISS

National Park Service Restores Some Jobs of Those Fired, Will Hire 7,700 Seasonal Workers

UP NEXT

Voletta Wallace, Notorious B.I.G.’s Mother and Keeper of His Legacy, Dies at 78

UP NEXT

Should Fossil Fuel Companies Be Forced to Pay for Los Angeles Wildfire Losses?

UP NEXT

Bullard Teacher Arrested for Inappropriate Behavior With a Minor, Principal Says

UP NEXT

Nearly 1 in 10 U.S. Adults Identifies as LGBTQ+, Survey Finds

UP NEXT

Fed Audit of CA High-Speed Rail Begins. $4B in Funding at Stake.

UP NEXT

California Lawmakers Scramble Again to Fix ‘Lemon’ Vehicle Law

UP NEXT

California Fire Captain Found Stabbed to Death in Home

UP NEXT

Arctic Blast Causes Massive Pileups, Power Outages Across East Coast

UP NEXT

‘A Step Backwards’: How Federal Threats to DEI Impact CA Schools

UP NEXT

Struggling Forever 21 Plans to Close 200 Stores in Possible 2nd Bankruptcy

Trump Fires Chairman of the Joint Chiefs of Staff and Two Other Military Officers

5 hours ago

Less Is More: 5 Ingredient Dinners Are Easier Than You Think

5 hours ago

Trump-Putin Summit Preparations Are Underway, Russia Says

5 hours ago

Warren Buffett Offers Trump Some Advice While Celebrating Berkshire’s Success

5 hours ago

Hungarians Will Decide Whether Ukraine Can Join the European Union, Orbán Says

5 hours ago

Wolfie the Handsome Pup Seeks Loving Home After Life in the Wild

5 hours ago

National Park Service Restores Some Jobs of Those Fired, Will Hire 7,700 Seasonal Workers

6 hours ago

Is That Legal? A Guide to Trump’s Big Moves So Far.

8 hours ago

Hotels Are So Last Year – Why Everyone’s Sleeping in Castles, Caves and Cranes

8 hours ago

With Trump’s Prostration to Putin, Expect a More Dangerous World

8 hours ago

Kash Patel Plans to Move Up to 1,500 Workers Out of Washington

WASHINGTON — New FBI Director Kash Patel has told senior officials that he plans to relocate up to 1,000 employees from Washington to field ...

4 hours ago

4 hours ago

Kash Patel Plans to Move Up to 1,500 Workers Out of Washington

4 hours ago

Fired Employees Fear Beloved Yosemite National Park Will Lose Its Luster

4 hours ago

US and Ukraine Nearing Rare Earths Deal That Would Tighten Relationship

5 hours ago

Trump Fires Chairman of the Joint Chiefs of Staff and Two Other Military Officers

5 hours ago

Less Is More: 5 Ingredient Dinners Are Easier Than You Think

5 hours ago

Trump-Putin Summit Preparations Are Underway, Russia Says

5 hours ago

Warren Buffett Offers Trump Some Advice While Celebrating Berkshire’s Success

5 hours ago

Hungarians Will Decide Whether Ukraine Can Join the European Union, Orbán Says

Help continue the work that gets you the news that matters most.

Search

Send this to a friend