Published: Thu, August 02, 2018
Markets | By Noel Gibbs

Eight experts debate the future of Tesla ahead of earnings

Eight experts debate the future of Tesla ahead of earnings

Electric vehicle maker Tesla has racked up a record $717.5 million net loss in the second quarter of 2018, twice the previous year's number.

Last quarter, the company reported about $3.4 billion in total revenue (automotive and energy combined) and a non-GAAP share loss of $3.35 per share. But with low cash reserves, investors have anxious that Tesla would need to borrow more money to keep the company afloat. Analysts polled by FactSet expected a $2.88 loss per share. While it's no secret that the Model 3 ramp-up got off to a much slower start than Tesla initially promised, the company during the last week of June did manage to boost Model 3 production up to 5,000 units/week.

"During the month of July", the letter reads in part, "we have repeated weekly production of approximately 5,000 Model 3 cars multiple times while also producing 2,000 Model S and X per week".

The company's future rests on its ability to mass produce the Model 3 - its most economical auto - a task that has seen Tesla fail to meet numerous self-imposed deadlines for the all-important 5,000-cars-per-week metric, reduce the amount of automation it was relying on in its factory, and build an entire assembly line in a tent.

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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.

The v9.0 update will come out in about four weeks, Musk said.

Tesla ended June with about US$2.2 billion in cash on its balance sheet, the least it's carried since the first quarter of 2016. "It's fair to say that no production ramp of any other product has been as closely watched and debated as that of Model 3". With Musk's blessing to "let the cat out of the bag", the company confirmed that it will be switching from its Nvidia-based emulation calculation platform to a proprietary on-board calculation method through use of an Application Specific Integrated Circuit (ASIC) meant to perform the AI calculations necessary for Autopilot to function more efficiently. Tesla also said it wants to churn out 10,000 Model 3s per week "as fast as we can".

The company said it produced 53,339 vehicles in the second quarter and delivered 18,449 Model 3s.

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Shares rose 5 percent in after hours trading at that promise, according to Reuters.

Tesla plans to pay off its upcoming debt - some $1.8 billion comes due before November 2019 - through internally generated cash flow, Musk said. The stock has slumped 19 per cent since a 2018 high of $370.73 in June. That credit will be halved for Tesla buyers next year and dwindle down to zero in the following months.

Tesla's full letter to shareholders can be viewed over here.

Follow Tesla's stock price in real-time here.

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