The company reported net-losses for the last three months in December of $675.4m or $4.01 per share, a fivefold increase in reported losses from last year's $121.3m. The production and delivery of the Tesla Model 3, their "affordable" $35,000 (£25,227.30) auto seems to be hitting several roadblocks.
Musk's Tesla electric auto and energy storage company lost $675.4m in the three months ending December 31, the company announced on Thursday, February 8, compared with a loss of $121m for the same period previous year. Tesla has never made a full-year profit since it went public in 2010.
Tesla posted $3.3 billion in revenue, as expected, but the Palo Alto firm led by CEO Elon Musk reported a $771 million quarterly loss - considerably higher than the $173 million loss forecast by Wall Street analysts. The adjusted loss eliminates one-time expenses, including stock-based compensation. Tesla said it is deferring some capital expenditure payments for the Model 3 to the first quarter of 2018. For the year, the company reported nearly $US12 billion in revenue.
Musk is a masterful marketer, and the red ink may not stem investors' excitement. The convertible, with a dummy in a space suit at its wheel, is now heading toward an asteroid belt between Mars and Jupiter. Clement Thibault, a senior analyst with the web site Investing.com, grumbled about Musk's recent fundraising efforts for The Boring Co., his new tunnel-drilling company.
Some analysts had expected Tesla's cash burn to slow down, but warned that it remains a risk. "There had initially been concerns about whether Model 3 would cannibalize Model S and Model X; it seems the opposite is true", Tesla wrote in the report.
Compensation for Musk, 46, will be based on a new 10-year performance stock award that could give him billions worth of company shares, or nothing at all if the company fails to meet its targets. In addition to the Semi going into production in 2019 and the Roadster coming in 2020, Tesla plans to add a crossover called the Model Y.
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In a letter to shareholders, Musk said it has been hard to get accurate forecasts for the auto, a more affordable model for the automaker known for expensive vehicles.
Earlier this month, the company raised $546 million in securitised notes backed by Model S and X lease payments, the first time Tesla has securitised its leases. This was just $277 million in the fourth quarter - the lowest in more than a year - after two straight quarters of more than $1 billion. The company plans to hit a production rate of 2,500 cars per week by the end of the first quarter. Tesla also said reservations for the vehicle remain "stable" despite the delays, but it didn't give a total.
In short, Tesla's Model 3 is weighing on profitability - and it will continue to do so until Model 3 production ramps up to higher-volume levels.
These sentiments were confirmed in the earnings call with Musk targeting the Chinese market with the Model Y. The proposal must still be approved by Tesla's shareholders, who are scheduled to vote in late March. Hasbro spiked over 7% on Wednesday after the firm projected strong growth in 2018 and said it has contingency plans for Toys R Us' bankruptcy filing.
The line's already working at its German Grohmann unit but it needs to be shipped to the US next month before it can go into use, Chief Executive Officer Elon Musk said.