Published: Thu, August 02, 2018
Money | By Ethel Goodwin

Elon Musk drama or no, Tesla still has investors on its side

Elon Musk drama or no, Tesla still has investors on its side

Tesla Inc burned through $US739.5 million ($A999 million) in cash in the second quarter, paving the way for the company to record a $US717.5 million net loss as it continues to crank out electric cars.

Musk in a conference call on Wednesday, addressing the company's largest quarterly loss to date, said the electric auto maker would not need to raise more cash and that capital expenses would be slightly below $2.5 billion in 2018, lower than most analysts' estimates.

Tesla went through $739.5m (£565.2m) in cash last quarter to reach its production objectives.

One thing that stood out and caught investors' attention is the fact that the company's Model 3 auto helped set a new record: a total revenue of United States dollars 4 billion in one quarter.

On the conference call accompanying the results, Tesla chief executive Elon Musk said he expected the company to avoid going back to the markets for capital and to be "essentially self-funding on a go-forward basis". He and chief financial officer Deepak Ahuja wrote that they expected Tesla to build as many as 55,000 Model 3s this quarter, which would almost double output from the three months that ended in June.

Musk reiterated a target of producing 6,000 Model 3 sedans per week by late August. Tesla says it's on track to produce 100,000 Model S and X cars this year.

Last quarter, Mr Musk mistreated two analysts by calling their queries about the company's cash needs and Model 3 orders "so dry" and "not cool". The 47-year-old Musk also delivered for the supporters who called for him to show more poise and execute after months of distracting and destructive behavior.

But on Wednesday, Musk apologised to both and said he was exhausted from working more than 110 hours per week last quarter. "Hope you accept my apologies".

Thus far, Tesla has only produced higher-cost versions of the Model 3, starting at about $49,000.

"We like the more muted tone of the company's outlook, with the absence of unnecessary new stretch goals", said CFRA analyst Efraim Levy. Tesla projected total 2018 capital spending at just below $US2.5 billion. The CEO carried out a reorganization last quarter and announced that 9 per cent of the company's workforce would be dismissed.

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