Increased Tesla Model 3 production helped the firm increase revenue in the second quarter of 2018 – although it still made heavy losses
Californian company posts record losses, but company boss Elon Musk says it is closing on profitability due to increased output of entry-level saloon
Tesla delivered more than 40,000 cars to customers in the second quarter of 2018 – including round 18,000 of the crucial Model 3 – helping it to post higher than expected revenues. However, the firm still posted record losses.
The Californian EV maker says it achieved its target of making 5000 Model 3 saloons a week “multiple” times in July, which helped it achieve $4bn [£3.05bn] of revenue, a 43% increase on the same period last year. However, Tesla still lost more than $717million [£547million] in the three months from April until June.
Tesla boss Elon Musk said the losses were because the firm had been spending heavily to reach its production targets for the Model 3, and that it was set to produce more than 50,000 cars in the third quarter. Tesla is aiming to make 6000 Model 3 a week by the end of August, although it has moved back long-term goals to increase production to 10,000 per week.
In a letter to shareholders, Musk said the firm was now in a position to make a profit later this year. He wrote: “It took 15 years to execute on our initial goal to produce an affordable, long-range electric vehicle that can also be highly profitable. In the second half of 2018, we expect, for the first time in our history, to become both sustainably profitable and cash flow positive.”
Tesla has reduced its staff levels and cut other expenses to reduce its capital expenditure and increase profitability. For example, the firm recently asked a small number of suppliers for cash back. That, combined with the steadier production flow, helped Tesla stocks to rise in value following the earnings announcement.