Nobody on Wall Street expected profits. Tesla delivered on that calculation and then some this Wednesday reporting a loss of $293.2 million, about twice what analysts were expecting according to Thompson Reuters, with $1.27 billion in revenue for the quarter. Despite the losses, investors were relatively sanguine, with shares down less than 1% in after-hours trading.
The company is currently on a spending spree, emptying the bank to develop its Model 3 production line; build Gigafactory, a battery factory in the Nevada desert; and add an average of one new retail locations every four days. Musk promised exponential growth for its vehicle production toward the end of the year in order to hit Tesla’s target of 500,000 cars by 2018, shortly after the Model 3 is due to roll off assembly lines.
Tesla spent much of 2016 playing catch up on car manufacturing goals. Musk said he “burned out a few neurons” trying to hit those targets. “We were in production hell for the first six months of this year,” he said during an earnings call. ”Now the producing line is humming…I’m not losing sleep over production issues.”
Tesla manufactured a record 18,345 cars (all Model S or Model X) according to Wednesday’s announcement, up 18% over the previous quarter, with revenue climbing 33% for the quarter. But it only delivered about 14,400 of these (the rest are in transit). Tesla says it’s on track to hit its 2018 target, and expects to be making 2,200 vehicles per week (pdf) by the end of the next quarter and 2,400 by the end of the year.
Much of Wednesday’s discussion focused on corporate fiscal discipline. Tesla touted a reduction in labor hours per car, supplier discounts, more efficient factories, and quarterly capital expenditures falling about half of last year’s $400M. Musk said the company would be profitable, if it wasn’t for the financial efforts to get the Model 3 and Gigafactory off the ground.
The company is spending as fast money as it raises it. Its cash or cash equivalents are now at $3.25 billion, buoyed by the secondary stock offering of $1.7 billion this May and deposits on about 373,00 Model 3 orders. But Tesla expects to spend an additional $2.25 billion this year to support its accelerated production schedule.
The company has faced a litany of challenges this summer. In June, a Tesla Model S collided with a truck while Autopilot was engaged—the first recorded death in a semi-autonomous vehicle. The SEC is still investigating. Tesla has also been missing production targets, and analysts have generally been underwhelmed with its Solar City acquisition. But none of that seems to have mattered much for Tesla’s stock price. It’s down just 7% from its peak in the last year.