Tesla swings to $671m loss on Model 3 delays

Jon Howard
November 2, 2017

One reason for the weak numbers was the trouble Tesla has been having with the launch of its Model 3, the company's first mainstream battery-electric vehicle.

And the problems will continue. Because of delays at its battery facility in Nevada, Tesla said it now expects to be making 20,000 Model 3s per month by the end of the first quarter of 2018. Tesla had initially said it could hit that rate during the current quarter.

Tesla reported a net loss of about $619.4 million, or $3.70 per share, compared to a net income of almost $21.9 million, or 14 cents a share, a year ago. Vetr cut shares of Tesla from a "strong-buy" rating to a "buy" rating and set a $358.85 price target for the company.in a research note on Tuesday, July 11th. Still, there's evidence that Tesla is very far from that goal: The Wall Street Journal reported last month that Model 3's were being "banged out by hand". Analysts polled by FactSet forecast a loss of $2.85 per share.

Even that timeline means Tesla has to scale back in other areas. The company opened 18 stores and service stations worldwide during the quarter, and set up 126 new Supercharger stations to try to prepare for the increase in demand from Model 3 buyers.

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Shares of Tesla have fallen almost 17 percent from a 12-month high of $385 in September, but are still up 50 percent from January fueled by belief in the long-term prospects of the company.

"The Model 3 production process will be vastly more automated than the production process of Model S, Model X or nearly any other vehicle on the market today, and bringing this level of automation online is simply challenging in the early stages of the ramp", Tesla said. The business had revenue of $2.79 billion for the quarter, compared to the consensus estimate of $2.50 billion. That, industry experts say, is among the reasons Tesla is nowhere close to its aggressive goal of building 500,000 vehicles annually by next year, majority Model 3s.

Last month, Tesla reported it delivered 26,150 vehicles in the third quarter, a 4.5 percent rise on the same period of 2016. The Company operates through two segments: Automotive, and Energy generation and storage.

Tesla's shares fell 3 percent to close at $321.08 Wednesday, but in after-hours trading following the earnings release, the stock fell an additional 4 percent, or $12.83, to $308.25.

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