Tesla posts their biggest quarterly loss

Alan Olson
February 8, 2018

On the books, the company ended the quarter with a cash balance of $3.4 billion. The company incurred a loss of around $675 million, its biggest ever quarterly loss.

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.

Electric vehicle maker Tesla has notched up its biggest ever quarterly loss and said it "learned many lessons" from its crucial Model 3 production plans. MarketWatch is live-blogging the results and the analyst call to follow.

Late on Wednesday, Elon Musk's electric vehicle maker said it was still expecting to build 5,000 Model 3 sedans per week by the end of June, a target it set out last month.

Production of the new Model 3 has run into some snags, according to Tesla.

Combined Model S and X deliveries in Q4 were up 28% year over year and 10% sequentially.

The firm's future hangs on the Model 3 sedan, but it has so far struggled with production bottlenecks.

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Therefore, the updated timelines seem to be mainly related to the previous delay in the production ramp-up, which was confirmed during the first week of January, after which they didn't update many delivery windows. The contrast between the relative certainty of Model S and X and the uncertainty of Model 3 might look troubling, but investors should probably take heart. In 2016, Tesla announced the culmination of its master plan: Model 3, a mid-priced EV for the mass market. But investors are concerned about the Model 3 because it was supposed to be the mass-market auto that could fly quickly off the assembly line and make money for the cash-burning company.

In stores where Model 3 is on display, customer foot traffic has increased considerably and orders for Model S and Model X have in fact increased. Tesla introduced the Powerwall, a key piece of the puzzle of electric vehicles and home solar energy generation. Service capacity more than doubled in 2017, partially due to new locations, but also through a 50 percent increase in productivity of existing service locations, as well as the significant expansion of Tesla's Mobile Service fleet, which now has 230 vehicles.

But unlike with other doomed companies posting dire losses quarter after quarter, Tesla revenues have been sizable.

Energy generation and storage revenue decreased 6 percent sequentially. That's down to Model 3 drivers paying to use the chargers, in contrast to Model S and X owners who have received free Supercharging.

2018 will be a transformative year for Tesla, with a high level of operational scaling. "With the planned ramp of both Model 3 and our energy storage products, our rate of revenue growth this year is poised to significantly exceed last year's growth rate". Tesla also notably maintained its target for a Model 3 production rate of 5,000 units per week by the end of Q2.

Automotive gross margins for the quarter dropped to 18.9 percent from 22.6 percent a year ago. It's now February and Tesla isn't really sure how many it can build. A stock experiencing a high level of volatility has a higher ATR, and a low volatility stock has a lower ATR.

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