The fourth quarter loss comes to $4.01 a share, on revenue of $3.29 billion, marking the Palo Alto, California-based car company’s biggest quarterly loss ever. It was much higher than the $121 million it lost in the same quarter the previous year,
There has been a lot of spending going on, with Tesla rolling out electric cars, a semi truck, and other products. Most of the losses are attributable to the roll out and production problems associated with the Model 3.
However, Tesla insists the losses are only temporary. “At some point in 2018, we expect to begin generating positive quarterly operating income on a sustained basis,” the company stated in its investor letter on Wednesday, reports Ars Technica.
Model 3 production bottleneck
More specifically, Tesla says they expect to build about 2,500 Model 3s per week by the end of the first quarter, upping that number to 5,000 a week by the end of the second quarter this year. Tesla delivered 101,312 Model S sedans and Model X SUVs last year, up 33 percent over 2016 and ahead of its targets,
To handle the bottlenecks in the Model 3 production line, Tesla bought an automation and machining company called Perbix last November. Perbix has supplied Tesla with parts for its high-tech factories in Fremont, California, and Sparks, Nevada, for the past three years, according to CNBC.
“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,” the letter said.
“The competitive strength of Tesla is not going to be the car; it’s going to be the factory,” Musk said. He added that a primary objective for Tesla is “productizing the Gigafactory.”
Revenues doing well for Tesla
Revenues for the company rose $2.7 billion for the final quarter of 2017, up from $1.99 billion in the fourth quarter of the previous year. Revenue from energy storage products — batteries and home electric storage systems, rose 6.0 percent on the year.
Credits the company earns for building zero-emissions vehicles, called ZEV credits, rose to $179 million for the quarter from $20 million during the same period in 2016. Tesla can sell its ZEV credits to companies who produce too few zero-emission cars.
Tesla stock has risen over the past year from $257 a share to as high as $383. On Wednesday, the stock rose $11.03, or 3.3 percent, to $345. In after-hours trading, the stock rose slightly higher after the earnings report was released.
“This was yet another awful quarter from Tesla,” said analyst Mark B. Spiegel of Stanphyl Capital, expressing concern that the company’s revenue is too dependent on non-sustainable ZEV credits. Spiegel said that with Tesla’s miscalculating vehicle production and delivery rates, they are vulnerable to competition from other car companies.
