Needless to say, Model 3 future success is a must.
Tesla did not have a very good end of 2017. The California-based company has just released its 2017 fourth quarter sales results and the numbers were not surprising. It was Tesla’s biggest-ever quarterly loss. One problem was, despite CEO Elon Musk’s promise to produce about 5,000 Model 3 sedans weekly by last December, production delays still plagued the EV. Only 1,550 deliveries were made in the fourth quarter. All told, Tesla lost $675.4 million, spent $787 million during that business quarter, losing a grand total of $1.96 billion in 2017.
Total revenue amounted to $3.29 billion, a year-over-year increase of just over $1 billion. Furthermore, it expects capital spending to “slightly” increase for 2018. If this information sounds bad to you, well, it kind of is. How did Tesla spend all of that investor money? It built factories, expanded production capabilities, and continued to develop new product. On the bright side, it increased profits from the sales of zero-emission vehicle credits to other automakers. Customer deposits also totaled $858 million. Tesla wrapped up 2017 with $3.37 billion in cash, but earlier this month raised another $546 million in securitized notes backed by Model S and Model X lease payments, according to Reuters.
Tesla acknowledged in a letter to investors “the slower than planned production ramp of Model 3,” and then announced a new, more realistic weekly production goal of 2,500 Model 3s by the end of the first quarter of 2018, followed by 5,000 by the end of the second quarter. However, the letter added 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.” Assuming the 5,000 weekly output is achieved, Tesla wants to expand to 10,000 per week. What can we take from all of this?
2018 must be the year of the Model 3. It’s make or break time. Those “production hell” issues need to be resolved and output dramatically cranked up. Otherwise, well, let’s not go there yet. By this time next year Tesla’s future may be ultimately decided.