Electric vehicle maker Tesla Inc burned through US$739.5 million in cash last quarter, paving the way to a company record US$717.5 million net loss as it cranked out more electric cars.
Tesla chief executive officer 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 US$328.85 in after-hours trading.
Photo: AFP
The net loss more than doubled from the same quarter a year earlier and was slightly larger than the first quarter.
However, Tesla’s cash burn in the second quarter slowed from about US$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 US$2 billion new factory in China and another plant in Europe, Musk said.
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.
In a statement released after the markets closed on 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 this month.
The company said it expects to reach 10,000 Model 3s per week “sometime next year.”
Cash from selling Model 3s, which begin at US$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 US$2.2 billion in June, from US$2.7 billion in the first quarter.
Musk said that 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, adding that he expects to make to about 750,000 vehicles in 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 capital spending for this year at just below US$2.5 billion. That is substantially less than last year’s level of US$3.4 billion.
The Palo Alto, California-based company said it lost US$4.22 per share from April through June as revenue grew 43 percent to just over US$4 billion.
Adjusted for stock-based compensation, the company lost US$3.06 per share.
That was worse than Wall Street estimates. Analysts polled by FactSet expected a US$2.88 loss per share.
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