Tesla posts record losses of $785 million – despite increased revenue and Model 3 production

Edward Munn May 3, 2018

The Tesla earnings for Q1 2018 have been announced and they’re unlikely to fill stakeholders full of confidence.

Tesla posts record losses of $785 million – despite increased revenue and Model 3 production

Elon Musk’s company is continuing to haemorrhage cash at an alarming rate, reporting overall losses of $784.6 million or $4.19 per share in the first part of the year, despite posting a record revenue of $3.4 billion.

Both these figures exceeded expectations, after analysts predicted revenue of around $3.142 billion and net losses of $3.26 a share, as reported by Electrek.

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At first, the news didn’t appear to hit investor confidence, as Tesla’s stock increased by 1% in the hour following Tesla’s announcement. However, in after-hours trading shares nosedived, dropping by 5% or around $2.4 billion.

The car manufacturer appears to have overcome long-running production problems with the Model 3, revealing it produced more than 2,000 cars per week for three consecutive weeks of April. However, much of the company’s revenue growth can be attributed to its “energy storage deployments” including the 129 MWh South Australia project, which generated revenues in excess of $400 million.

Despite growing losses, the company’s bosses are confident it’ll post positive net income (excluding non-cash stock based compensation) by the end of this year. “This is primarily based on our ability to reach Model 3 production volume of 5,000 units per week and to grow Model 3 gross margin from slightly negative in Q1 2018 to close to breakeven in Q2 and then to highly positive in Q3 and Q4,” the company’s letter to shareholders reads.

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“Even at this stage of the ramp, Model 3 is already on the cusp of becoming the best-selling mid-sized premium sedan in the US, and our deliveries continue to increase. Consumers have clearly shown that electric vehicles are simply more desirable when priced on par with their internal combustion engine competitors while offering better technology, performance and user experience.”

Last month, Tesla confirmed its delivery numbers for Q1 2018, revealing a record production of 34,494 vehicles, of which, around 8,000 were the Model 3.

Elon Musk’s contract with Tesla is based wholly on hitting ambitious targets over the next ten years, so he receives no compensation unless he can boost both the company’s market value and its revenue or profits.