Tesla’s (NASDAQ:TSLA) Losses Mount as Claims Broaden

Tesla’s (NASDAQ:TSLA) Losses Mount as Claims Broaden

Tesla’s (NASDAQ:TSLA) Losses Mount as Claims Broaden


Wednesday, Tesla’s (NASDAQ:TSLA) CEO Elon Musk, pulled back on estimates of Model 3 reservations, even as the company reported stronger than expected losing results.

The fledgling EV maker continues to lose money, although it cited growing excitement and profit margins for its vehicles.

Tesla reported a real $336-M loss in Q-2, roughly 15% larger than the same frame last year, or 2.04/share. Company revenues for the Quarter were $2.79-B, more than 2X last year’s Q-2 revenues. Then, adjusted for 1-time expenses, Tesla reported a $220-M loss, or 1.33/share.

Market watchers surveyed estimated a company loss of $450-M, or 2.34/share, on revenue of $2.5-B. Excluding certain expenses, analysts estimated losses of about $310-M, or 1.88/share.


Tesla burns cash.

On the good losing news, Tesla stock jumped nearly 8% in after-hours trading Wednesday.

The EV maker and clean energy company says it is building its brand beyond a quasi-luxury niche, 4X’ing production and introducing new products like its lower-cost Model 3, an electric semi truck, solar roofs and residential and commercial storage.

Mr. Musk revised an earlier estimate that the company had more than 500-K Model 3 reservations. He said Wednesday the company has received 518,000 total reservations, but due to cancellations, it has netted 455,000 orders.

Mr. Musk said July was 1 of the company’s best months, but noted how hard it is to build more cars, faster.

“What we have ahead of us is an incredibly difficult production ramp,” he told analysts.

Since the handover last week of the 1st hand made Model 3 sedans to employees, the company said its averaging more than 1,800 net orders daily.

The price starts at $44,000 (about $50,000 fully equipped) with a base, aka stripped down, model coming later this year for $35,000. The car is much more expensive than the demographic it is designed for can afford.

Mr. Musk said Tesla has also seen new interest in the Model S and Model X.

The company delivered the keys of the hand Model 3 to 30 employees. The company hit a tight PR display deadline, turning out its 1st, lower-cost cars in July. The company hopes to produce  500,000 EVs at its Fremont plant next year, a goal Mr. Musk acknowledged would bring “production hell.” Read will never be met.

Deliveries to non-employees will begin in Q-4 he says.

Shipments for the luxury Model S and X stalled in Q-2, declining 12% from the previous Q. The company blamed a shortage of 100 kilowatt hour battery packs. It shipped about 47,100 vehicles in 1-H of Y 2017 on pace for a record year.

Notably, the tax credits fade when the total production from Tesla reach 200,000 vehicles, the number looms.

A close look at the SEC filing truing out The Musk Noise reveals that the company needed massive outside cash infusions for 3 of the last 4 Quarters. The company also must master increased customer service demands, including customer support and charging and repair network. Mr. Musk has suggested the the company send a mechanic to the owner/drivers home to fix the cars, kinda like the “shade tree” mechanics of old.

This raises questions about Tesla’s ability to scale not just its manufacturing operation, but the entire supporting infrastructure, particularly since Tesla continues to insist it will run all its operations in-house. And Tesla has no consumer financing abilities for buyer.

But, Mr. Musk said the company expects to be able to handle a growing customer base. It will 3X the number of superchargers by the end of next year, he said. The company is also building a mobile repair fleet, since 80% of repairs do not require the car to be put on a lift, he said, “The Shade Tree Mechanic” on wheels. A Tesla could be fixed at an owner’s home or in a parking lot.

“The ideal service is invisible,” Mr. Musk says.

Company friendly analysts say investors will be boosted by the company’s first Model 3 deliveries, new product details and updates on its solar roof. The high-end roofs are designed for aesthetics and durability, as high efficiency solar cells are embedded into tiles.

Mr. Musk said the roofs have been installed on his home and the home of CTO JB Straubel. Testing 1-2-3…

Have a terrific weekend.

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Paul Ebeling

Paul A. Ebeling, polymath, excels in diverse fields of knowledge. Pattern Recognition Analyst in Equities, Commodities and Foreign Exchange and author of “The Red Roadmaster’s Technical Report” on the US Major Market Indices™, a highly regarded, weekly financial market letter, he is also a philosopher, issuing insights on a wide range of subjects to a following of over 250,000 cohorts. An international audience of opinion makers, business leaders, and global organizations recognizes Ebeling as an expert.

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