Blog Tesla Posts Loss Amid Model 3 Production Trouble

Tesla results for the third quarter 2017 showed revenue of about $2.9 billion and a loss of about $3.70 per share. Analysts expected a loss of $2.45 per share, but necessary capital expenditure related to Model 3 production woes impacted Tesla’s losses.

The results compare to revenue of $2.8 billion and a loss of $2.04 per share in Q2. Revenue increased 30 percent year-over-year.

While the carmaker experienced the largest quarterly loss in its history, the company also set a record for delivery of the Model S and Model X:

In Q3, we delivered 25,915 Model S and Model X vehicles and 222 Model 3 vehicles, for a total of 26,137 deliveries. Combined Model S and Model X deliveries in Q3 grew 18% globally compared to Q2 and 4.5% versus the same quarter one year ago. Consequently, both Model S and Model X gained further market share in the US luxury vehicle market. In addition, our used vehicle sales more than doubled from the prior quarter.

Margins, however, slumped to 18.3 percent from 27.9 percent the previous quarter due to Model 3’s high production cost and few deliveries to date. The company said it plans to produce “about 10% fewer” units of the Model S and Model X in the fourth quarter to devote more resources to the Model 3.

With a cash balance of $3.5 billion entering the fourth quarter, Tesla expects capital expenditures to be about $1 billion. Initiatives demanding capital include Model 3 production equipment, factory improvements, and Tesla’s expansion of stores, service centers, delivery hubs and the Supercharger network.

 

[YNOT3]

Takes money to make money. Obviously the company isn’t going to be profitable for years to come. The valuation has lots of growth baked in. Just got to wait for the pie to cook.

 

[MSDadMich]

Takes money to make money. Obviously the company isn’t going to be profitable for years to come. The valuation has lots of growth baked in. Just got to wait for the pie to cook.

This is always the case with relatively new companies that are going through a very fast growth period. Hold on to your stock if your in it for the long term. Tesla is holding all of the right disruptive cards this time...

 

[kort677]

Takes money to make money. Obviously the company isn’t going to be profitable for years to come. The valuation has lots of growth baked in. Just got to wait for the pie to cook.

at some point the investors aren't going to buy that. AFAIK tesla has yet to show profits and this steep decline, record loss with problems in production (selling cars is how they generate profits) is not good news for tesla.

 

[kort677]

This is always the case with relatively new companies that are going through a very fast growth period. Hold on to your stock if your in it for the long term. Tesla is holding all of the right disruptive cards this time...

tell that to the guy holding some $325. shares. at this point there is a good chance of a significant pull back in the stock price.

 

[YNOT3]

I’m one those guys. What, you thought model 3 production was going to be perfect and the company would be profitable in February ‘18?

 

[Magus]

Tesla has had worse problems it had to overcome than this. They will succeed ultimately.

 

[electracity]

Tesla has had worse problems it had to overcome than this.

When?

They will succeed ultimately.

How are you defining success?

 

[ecarfan]

How are you defining success?

I realize you are not asking me that question, but I will provide my definition: “accelerating the advent of sustainable transport” (quote from Elon) and becoming financially viable. Tesla has already achieved a significant measure of success in changing the way EVs are perceived and accepted by the market and altering the mindset of the traditional car companies such that they are either offering or will offer long range EVs. Tesla is in the process of laying the foundation of becoming financially viable. There certainly remain obstacles to achieving that goal, but Tesla is far closer to it now than it was just a couple of years ago.

Tesla has had far worse problems in the past than it has now with ramping up Model 3 production. Just 10 years ago Tesla was nearly bankrupt and had yet to produce a single car: now it is producing cars at a rate of 100,000/year and is generating signficant revenue (but of course no profits because it is investing in capex to grow like every young company must, especially a company that is competing against established industry giants). Just 5 years ago Tesla had produced only a few hundred Model S and had built only a handful of Supercharger locations; now it has produced over 200,000 cars and has built over 1,000 Supercharger locations. Just 2 years ago Tesla was struggling to build the first Model X; now it has produced over 57,000. I could go on.