Tesla reports its worst ever quarter, but profitability plans are in place
The logo of Tesla is seen in Taipei, Taiwan on August 11, 2017. REUTERS/Tyrone Siu/File Photo
Tesla has reported its worst ever quarter, losing $717.5 million in Q2 2018, as per the numbers shared by the company during the earnings call. This is the worst ever quarterly loss for the tech and auto company, as Tesla burned through $430 million in cash in the quarter ending June. A lot of this expenditure went towards meeting the production targets for the Model 3 sedan, now maintaining a production level of 5,000 Model 3 every week.
However, it is not all bad news, as Tesla also reported $4 billion in revenue. In the same quarter in 2017, Tesla had reported a revenue of $2.79 billion.
Some way through the quarter which ended in June, Tesla CEO Elon Musk had set a production target of 6,000 Model 3s per week. Tesla also revealed the production and deliveries numbers for quarter ending June, and the Q2 2018 production clocked 53,339 vehicles. This includes 18,449 units of the Model 3 sedan ($49,000 onwards), 10,930 of the Model S sedan ($65,000 onwards), and 11,370 of the Model X SUV ($71,300 onwards). Tesla also produced and delivered 10,000 more units of the Model 3, as compared with Q1 2018.
In the same quarter, Tesla also laid off 3,500 employees, roughly 9 percent of the total workforce. In July, Tesla also firmed up plans for a new plant in China, called Gigafactory 3, which will be the company’s first outside the US.
Tesla is very focused on the next quarter, and CEO Elon Musk sees profitability ahead. “Our goal is to be profitable and cash-flow positive for every quarter going forward,” he said, during the earnings call.
“We aim to increase production to 10,000 Model 3s per week as fast as we can. We believe that the majority of Tesla’s production lines will be ready to produce at this rate by end of this year, but we will still have to increase capacity in certain places and we will need our suppliers to meet this as well,” says CEO Elon Musk, in an official statement. For the next quarter, Tesla intends to manufacture as many as 7,000 vehicles every week, with the aim of clocking 3,50,000 cars manufactured every year. “This should enable Tesla to become sustainably profitable for the first time in our history,” the company said in a note to investors.
One of the new initiatives from Tesla includes a Factory-Direct delivery system. The car maker is using enclosed trailers to transport new vehicles straight from the factory to the new owners’ homes. Tesla CEO Musk posted on Twitter, saying “We tried out a new delivery system using an enclosed trailer straight from factory to owner’s home, so super convenient & car arrives in pristine condition without wasting plastic wrap.” The first car delivered with this new delivery system was to the owner Devin Scott from Playa Vista, Los Angeles, California, from Tesla’s Marina Del Rey delivery centre—the car in question being a Model 3.