Tesla shares jump as it eyes 'sustainable profitability'
Tesla managed to stem the rate at which it burned through cash in its latest quarter, despite ramping up production of its Model 3 sedan significantly following months of delays.
Shares in the electric carmaker jumped 10pc in after-hours trading this evening after Tesla said it could be "sustainably profitable" by the end of the year.
It reported a loss of $742m (£565m) for the three months to June 30, slightly down on its previous numbers. However, revenues rose to $4bn in the three months to June 30, up from $2.7bn, and its negative free cash flow came in at around $160m below analyst expectations, at $740m, as it burned much less cash than in recent quarters.
Tesla ended the second quarter with $2.2bn in cash, and said it expects this to grow in both its third and fourth quarters.
Going into the results, analysts had suggested it would need to raise additional funds before the end of the year, given the amount it was investing into production, with some predicting it would need up to $3bn.
However, boss Elon Musk has repeatedly denied this and, on Wednesday, the company said it could become cash flow positive and "sustainably profitable" before the end of 2018.
Tesla Model 3 in pictures
"We're confident that, provided the economy is roughly where it is today and there's not a big force majeure event, I feel comfortable achieving GAAP income positive and cash flow positive every quarter from here on out," Mr Musk said.
"We will not be raising any equity at any point. I have no expectations to do so," he added.
The electric car company has battled to build up production levels of its first mass production car, the Model 3, to 5,000 a week with an ultimate target of producing 10,000 cars per week. The company said it was now producing "roughly" 7,000 cars in total during the final week of June, which Mr Musk called "an amazing jump from only a year ago when we were producing 2,000 vehicles a week".
"It's a mindblowing leap forward for a manufacturing company," he added.
History of Tesla
Tesla's push to increase production has seen it build a giant covered tent outside its normal factory where workers can manually assemble the Model 3 cars to meet targets. The move came after Tesla’s own automated production factory ran into delays and problems with its robots.
Bernstein analyst Max Warburton described the makeshift factory as “insanity”.
However, while Tesla said the tent was "permanent for now", it said production was picking up across its production lines, with the majority expected to be ready to produce at a 10,000 vehicle rate "by the end of this year".
The upbeat outlook will come as a relief to Tesla investors, who have seen the company struggle with a raft of delays and setbacks.
This week, Tesla was hit by fresh lawsuits. Three workers from its SolarCity business, which makes solar panels, alleged that sales figures were inflated in a case filed in San Diego.
A separate case, brought in a highly public spat by former Tesla worker Martin Tripp over alleged safety issues at the company.
Earlier this year, Mr Musk announced the company was going to concentrate on cutting costs, and around 9pc of its workforce have been slashed.
Profile | Elon Musk
Wednesday's earnings report was the first since a tense conference call in May in which Mr Musk decided to veto "boring, bonehead" questions by Wall Street analysts.
He later admitted it was “foolish” of him to ignore those questions, and during the earnings call on Wednesday apologised to analysts for being "impolite" on the last earnings call.
