Is Tesla in financial trouble?
There has been a lot of talk since the start of the year surrounding Tesla’s difficulties in getting Model 3 production off the ground. Tesla find themselves in the unusual position of having a vast backlog of orders, all of which having to wait an inordinate amount of time to receive a build slot. Even with fairly optimistic ramp up plans, Tesla have failed to hit any of their production targets for the Model 3.
To hit profitability they need to be producing 5,000 Model 3’s a week, not the 2,270 they produced in the last week of April. Tesla have claimed once they hit this figure the business should turn to profitability. As per their usual format of staggeringly optimistic targets, they claim this should occur in the second half of 2018.
For now, the business has posted a record quarterly loss of almost $710m (£523m) for the three months to March - more than double the same period last year. Revenue through the business has increased by 26% to $3.4bn, but with mounting pressure to streamline production most of this revenue has simply poured out the door.
Tesla has seen its shares begin to decline in recent months as poor production figures begin to unsettle the market. "We made a mistake by adding too much automation too quickly," Tesla told investors on Wednesday. During an interview with financial analysts, Mr Musk appeared frustrated by incessant questions about the health of the company’s finances. "These questions are so dry. They're killing me," he said, before switching his attention away from the institutional analysts to a finance-focused YouTube channel.
Mr Musk was also keen to point out to investors the long-term benefits of the business, stating "If people are concerned about volatility, they should definitely not buy our stock." Tesla are likely to pull things around with the backing of such a strong customer base, and with the business valued at $51bn they are sure to secure any further finance needed to get the business over this rather sizable production problem.