Tesla Model 3, Elon Musk’s grail, remains a costly pursuit
On Tuesday, Elon Musk had a Tesla Roadster launched toward an orbit around the sun. A day later, he and his car company came back to Earth.
The electric-car maker said Wednesday that it lost nearly three-quarters of a billion dollars in the fourth quarter as it scrambled to root out glitches from its manufacturing operations and ramp up production of its Model 3 sedan.
In a conference call with analysts, Musk, the chief executive, acknowledged that Tesla faced challenges in putting the Model 3 into mass production. “We were in a deeper level of hell than we expected, still a few levels deeper than we would like to be,” he said.
The company reported a quarterly net loss of $771 million, more than tripling the loss it reported for the same period a year earlier. Revenue increased 44 percent to $3.3 billion, on rising sales of its Model S luxury sedan and Model X, a sport-utility vehicle.
Analysts fret about the hiccups Tesla has encountered and how much money it must spend while trying to move into high-volume production.
“Cash burn does matter, as it is a finite resource, and ramp delays on the Model 3 only exacerbate the cash burn,” Brian Johnson, a financial analyst at Barclays, wrote in a note to investors.
Putting the Model 3 into mass production is a critical task for Tesla. The company has taken $1,000 deposits from about 400,000 customers interested in buying the car.
Just two years ago, Musk hoped to make 500,000 by 2018.
In July, as Model 3 production was about to begin, Musk ratcheted back expectations, resetting his target to 20,000 vehicles a month by December. But difficulties producing battery packs at Tesla’s Nevada plant and other glitches in the car’s assembly process combined to slow output.
In January, Tesla said it had made only 2,425 in the final quarter of 2017.
