Published: Thu, August 02, 2018
Markets | By Josh Butler

Tesla Earnings: Shares Rise 11% as Musk Apologizes for ‘Bad Manners’

Tesla Earnings: Shares Rise 11% as Musk Apologizes for ‘Bad Manners’

Some analysts have questioned whether Tesla can maintain a higher rate of production after rushing to meet an internal target to build 5,000 Model 3s per week by the end of June. The call triggered a stock sell-off and raised questions about Mr Musk's behaviour.

He explained he had been exhausted from working more than 110 hours per week last quarter. "Hope you accept my apologies".

VideoTesla soared in late trading after second-quarter revenue beat expectations and the cash burn slowed.

Founder Elon Musk said that by the end of August, the company will crank up Model 3 production to 6-thousand cars a week, and 10-thousand a week starting next year.

Wednesday's earnings report also comes as Musk has faced scrutiny for recent erratic behavior.

Tesla said Wednesday that its lone car-making factory in Fremont, Calif., had made 5,000 Model 3 sedans a week multiple times during July and should be able to continue at that rate through the third quarter. But it ended up with $2.2 billion in cash at the end of June - way more than most had feared. It also said that Model 3 gross margins would "grow significantly" to about 15% this quarter and 20% in the last three months of the year.

The improved production capacity is, according to Tesla, down to the removal of "bottlenecks across various stages of the Model 3 manufacturing process".

Musk's tweet last month calling a British diver working on the cave rescue of Thai schoolboys a "pedo guy", or pedophile, elicited a rare rebuke from Tesla's fourth-largest shareholder, Baillie Gifford, that Musk should stop tweeting and focus on executing the company's business at hand.

Northern California wildfire raging into its fourth day
Meanwhile, about 120 miles (200 kilometers) southwest of Redding, two blazes prompted mandatory evacuations in Mendocino County. At least five people are dead and more than 38,000 people displaced as firefighters work to contain the blaze.

"We believe we can be sustainably profitable from Q3 onwards".

Tesla is now producing more expensive versions of its Model 3 that start at about $49,000. Tesla projected total 2018 capital spending at just below $2.5 billion.

Revenue jumped 44% to $4 billion, beating analysts' forecast of $3.92 billion.

Driving the shares higher was a sharp reduction in operating cash-flow losses: from almost $400 million in the first quarter down to just $130 million in the second. The compay reported an adjusted net loss of $3.06 per share, more than analysts expected. That was worse than Wall Street estimates.

Tesla's website describes upcoming features - including the ability for a vehicle to change lanes without driver input, move from one freeway to another, and exit a freeway near the driver's destination - that are not available in Autopilot's current iteration.

Tesla has begun to lay off 9 percent of its workforce as it tightens spending.

Tesla management has previously predicted that it would turn a profit sometime in the third quarter.

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