Tesla has had a tough time this summer, but on the most recent earnings call, CEO Elon Musk declared that the company has overcome its production issues. Musk also said there are no changes to his grand plans despite the company missing sales and earnings expectations.
No delay with the Model 3
It has been a trend that Tesla fails to meet financial goals and often releases new models late, but Musk assured investors it won’t be repeated with the Model 3, which is scheduled for release in 2017. The CEO also said the company will meet its target of producing 500,000 cars in 2018.
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Musk said on Wednesday that the company “just managed to climb out of hell” in June, and now the “production line is humming.” This is a big change for Musk, who a few months ago said that in order to fix the problems with the factory, he had been sleeping by the assembly line.
Investors who were not happy with the loss of $1.06 per share on an adjusted basis – 77% more than estimates and double that of last year – were somewhat relieved thanks to the manufacturing progress and affirmation of goals.
“The key is that Tesla reiterated 500,000 vehicles in 2018,” said Dougherty & Co. analyst Charlie Anderson. “They spent more money, which is why EPS was down. But the spending was on R&D. This is a company that is continuing to invest the future.”
Tesla improving Autopilot technology
Tesla has been making headlines recently for its Autopilot feature, which resulted in a fatal crash in Florida.
Commenting on this, Musk said. “Tesla can’t sneeze without there being a national headline,” adding that the company has been working continuously on improving the technology so as to achieve full autonomy. “Full autonomy is going to come a hell of a lot faster than anyone thinks it will. And I think what we’ve got under development is going to blow people’s minds. Blows my mind,” he said.
Tesla’s gross margin was reported at 21.9%, topping the consensus estimate of 21.5%, noted UBS Securities analyst Colin Langan. Free cash flow for the quarter was at -$144.4 million, better than analysts’ predictions of -$309.6 million, as the company cut short its capital expenditures.
Tesla worked hard to complete the Model 3’s engineering. The EV firm had received 373,000 reservations for the Model 3, which is unchanged since May, but says Model S orders increased during the quarter.
In premarket trading, Tesla shares were in the green. Year to date, the stock is down more than 5%, while in the last year, it is down more than 15%.