Model 3 bottlenecks cause Tesla to burn more than just rubber


Tesla Reports Another Loss as It Struggles With Model 3

In February, Musk said that Tesla plans to unveil the Model Y production plans in the next 3-6 months and that the company will start capital investment into the program this year.

The Tesla shares rose due to less than expected loss on Wednesday as the electric vehicle maker made more revenues in its Model 3 production back in April. After the analyst asked a question about whether the company could reach its 25 percent gross margin target on the Model 3, Chief Financial Officer Deepak Ahuja said recently imposed tariffs, more expensive commodities and higher labor costs factored into the company's guidance.

Instead, Mr Musk took questions from YouTube vlogger and journalist Galileo Russell who was listening to the call.

Musk is known for his quirks, but investors appeared to be put off. Tesla shares were down almost 5% during after-hours trading, despite posting better-than-expected earnings results.

Musk said, "We will not be starting production of the Model Y at the end of next year". But it was far short of the 5,000 vehicles per week that Tesla said was needed to achieve profitability.

The carmaker has repeatedly missed production targets and did so again this quarter, although investors already knew this thanks to an update earlier in the year.

In 2016, the company built a total of 101,312 vehicles. The business is now producing around 2,000 of the vehicles a week versus a targeted 5,000.

"We had these fiberglass mats on the top of the battery pack, but basically like-they're basically fluff", said Musk.

The company's goal was to be cranking out 5,000 Model 3 vehicles weekly in about two months. Furthermore, he added that Tesla will have to raise a finance of about $2 billion-$3 billion again by March 19, 2019, when the last tranche of debt would have to be cleared.

Nevertheless, the loss was lower than what Wall Street analysts expected, while revenue also trumped estimates.

The company said it ended the quarter with $3.2 billion in cash after spending $655.7 million in quarterly capital expenses.

"Nor will testy conference calls help the company's case if - or when - it needs to access equity or debt markets for fresh funding, something which seems quite possible given the company's current cash flow profile".

The Model Y is just one of many projects in the pipeline for Tesla, which also launched a Tesla Semi and a new Roadster in recent months.

Tesla had hoped to be producing 2,500 Model 3s by the end of the quarter but was forced to backtrack on that as it grappled with production issues in its factory.

Net reservations for the Model 3, including configured orders not yet delivered, exceeded 450,000 at the end of the first quarter.

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