Tesla reports record loss, says Model 3 still delayed

Ethan Baron, The Mercury News on

Published in Business News

PALO ALTO, Calif. -- Electric car maker Tesla's fourth-quarter 2017 revenue matched Wall Street's expectations Wednesday, but the firm racked up a record loss and reported no improvement -- and a lack of confidence -- in the production timeline for its Model 3 sedan.

Tesla posted $3.3 billion in revenue, as expected, but the Palo Alto firm led by CEO Elon Musk reported a $675 million quarterly loss attributable to shareholders -- higher than forecast by Wall Street analysts.

Investors also suffered a $4.01 loss per share, worse than the $3.69 loss analysts had forecast.

Tesla's quarterly revenue was about $1 billion higher than it brought in during the fourth quarter of 2016.

Much attention from analysts and the public has been focused on Tesla's Model 3 sedan, the company's entry-level electric vehicle and its bid for the mass market. The car, which starts at $35,000, has met with production delays that have pushed the 5,000-units-per-week delivery target from the end of December to the end of March, to the end of June. The Model 3s now in production are a $50,000 version with a longer-range battery than the lowest-priced version.

Tesla began showing off the Model 3 in showroom displays in January, with the first public access offered at the ritzy Stanford Shopping Center mall in Palo Alto and at another mall in Los Angeles.

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Those showroom displays helped increase pre-orders for the Model 3, Tesla suggested. But the company said its twice-delayed target of producing 5,000 Model 3s a week would remain in place, with the firm aiming to hit that number by the end of June -- though it didn't express total confidence that its production ramp-up would allow it to meet the target.

"It is important to note that while these are the levels we are focused on hitting and we have plans in place to achieve them, our prior experience on the Model 3 ramp has demonstrated the difficulty of accurately forecasting specific production rates at specific points in time," Tesla said in a letter to investors Wednesday.

"What we can say with confidence is that we are taking many actions to systematically address bottlenecks and add capacity in places like the battery module line where we have experienced constraints," the company said.

Attention to those issues should lead to a "significantly" increased Model 3 production rate through the first half of this year, Tesla said.


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