Tesla posts loss but says Model 3 rollout still on track

Andrew Cummings
February 26, 2017

The Model 3 is "on track" to start limited production in July, and the company says its Fremont facility should be cranking out 5,000 cars a week around September of this year.

Tesla offered assurances Wednesday that the launch of its first mass-market electric vehicle, the Model 3, remains on track as it issued fourth-quarter results that cut its losses and beat revenue estimates.

It plans to keep ramping up Model 3 production until it hits 5,000 cars a week in the fourth quarter and 10,000 vehicles a week in 2018.

"I think it's probably three to four months away" said Musk referring to the Model 3 configurator.

Kallo, a more bullish analyst with an "outperform" rating on the stock, blamed the quarterly loss in part on the acquisition of SolarCity, and said the solar piece of Tesla's business exceeded his expectations for the quarter.

The company reported a fourth-quarter loss, excluding some items, of 69 cents a share on Wednesday, narrower than the $1.14-a-share average estimate among analysts surveyed by Bloomberg.

The company did not give a Model 3 target for this year and declined to update a previous disclosure made last April that 373,000 advance reservations had been taken for the vehicle. Q4 saw 49-percent more global net orders for the cars, combined, than a year previous. So if we factor in the latest 35 percent cost reduction claim, then Tesla could be making batteries for $124 or even lower.

The capital expenditures planned ahead of the Model 3 introduction surpassed the $2.3 billion that Ryan Brinkman, a JPMorgan Chase & Co. analyst, had estimated the Palo Alto, California-based company would spend in all of 2017. Musk said: "According to our financial plan, no capital needs to be raised for the Model 3, but we get very close to the edge". According to AutoCar, Musk told investors that the company will begin to produce 5,000 units of the Model 3 per week by the end of 2017. That's totally doable considering Gigafactory-1 is only 14% finished and construction of Gigafactory-2 in Europe could start as early as this year.

Tesla's cash reserves are up $300 million to $3.4 billion. Meeting that ambitious target will depend a great deal on the Model 3, which is expected to boast at least 215 miles (350 kilometers) of battery range per charge.

However, this is only under the presumption that there has not been a dramatic increase in reservations for the Model 3, which can not be said for sure as Musk declined to update the number. Although the auto is being priced without reliance on tax incentives, numerous 300,000+ deposits were placed hoping to receive one anyway.

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