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Tesla Increases Spending As They Post Worst Ever Quarterly Loss

Tesla Increases Spending As They Post Worst Ever Quarterly Loss

Tesla is burning through its cash reserves after posting its worst-ever quarterly loss.

During its quarterly investor call, the Palo Alto California-based company said that they’ll be sticking to CEO Elon Musk’s revised production targets of 5000 Model 3s per week in 2018, but also said that spending will increase as a result and that losses could still be in the company’s future.

Although posting its worst ever loss, Tesla also reported its best ever quarterly revenue at $3.3 billion. However, the $771 million quarterly loss last quarter pushed Tesla’s annual cash flows into the negative at $276.7 million.

The company posted a total net loss of $2.24 billion in 2017, compared to $773 million in 2016.

Shares with the company were down 0.3 percent in after-hours trading on Wednesday evening.

via Tesla

Tesla’s losses represent an enormous bet on the back of the Model 3, counting on sales of the midsize family sedan to reach into the billions of dollars to make up for the current losses - a difficult proposition considering the car sells for $35,000, or about half as much as a Model S.

The company famous for pioneering electric vehicles was struck with various production delays in 2017 that prevented many of the planned Model 3s from getting to their respective owners. Tesla only delivered 1550 of the expected 4100 cars last quarter, which meant that revenue never hit the company's bottom line.

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Despite delays, Tesla insists that they’ll be able to reach production of 5000 cars a week by 2018.

Overall, Tesla delivered 102,000 cars total in 2017, breaking its target of 100,000 vehicles. It also said they’ll be expanding production at their Fremont factory and Nevada Gigafactory, and to expect spending values to increase in 2018 as a result.

Tesla also warned investors that spending will continue to rise as they gear up for the release of the Tesla Roadster—one of which is now orbiting the Earth—and the Tesla Semi Truck.

However, some analysts are becoming impatient with the electric company. Bernstein analyst Toni Sacconaghi Jr. is calling for the company to “show me the money” with its future performance. "With its cash drain growing and production and gross margin visibility low, we consider Tesla a show-me story," he wrote in a note before the release of last quarter’s results.

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