Tesla loss $675M in 4Q as Model 3 targets unmet

Posted: February 8, 2018 at 2:01 a.m.

FILE- In this June 24, 2017, file photo, a Telsa car recharges at a Tesla charging station at Cochran Commons shopping center in Charlotte, N.C. (AP Photo/Chuck Burton)

Tesla Inc. on Wednesday posted a record quarterly net loss of $675 million in the fourth quarter, up from a net loss of $121 million in the same period a year ago.

The Palo Alto, Calif., automaker led by billionaire Elon Musk is struggling to meet production targets for its first mass-market car, the Model 3 sedan. It's also spending heavily on future vehicles, including a semi that's supposed to go into production next year.

Tesla lost $1.96 billion for the full year, nearly three times its loss of $675 million in 2016. The company has never made a full-year profit since it went public in 2010.

Tesla's adjusted fourth-quarter loss of $3.04 per share was ahead of Wall Street's estimated loss of $3.15 per share, according to analysts polled by FactSet. The adjusted loss eliminates one-time expenses, including stock-based compensation. Revenue for the quarter was $3.3 billion, which was in line with analysts' forecasts.

Tesla's total revenue for 2017 was $11.8 billion, which was also in line with analysts' forecasts.

The red ink may not stem investors' excitement for the brand. The company's shares jumped $11.03, or 3 percent, to close Wednesday at $345, a day after Musk's rocket company, SpaceX, launched its Falcon Heavy rocket with Musk's cherry red Roadster as its cargo. The convertible, with a dummy in a spacesuit at its wheel, is now heading toward the asteroid belt between Mars and Jupiter. Tesla's shares are also in the stratosphere, up 8 percent from the start of this year.

Some analysts are questioning whether Musk should be spending more time fixing Tesla's woes and less time marketing SpaceX. Clement Thibault, a senior analyst with the website Investing.com, grumbled about Musk's recent fundraising efforts for The Boring Co., his new tunnel-drilling company.

"He appears to be more eager to sell hats and flamethrowers rather than meeting previously stated production targets for Tesla vehicles," Thibault wrote in a note to investors.

Tesla delivered 101,312 Model S sedans and Model X SUVs last year, up 33 percent over 2016 and ahead of its targets, according to preliminary figures released last month. But it fell short on the Model 3, which went into production in July. Tesla made 2,425 Model 3s in the fourth quarter and has pushed back production targets multiple times.

Musk said last month that Tesla wants to be making 10,000 Model 3s per month by the end of the first quarter and 20,000 per month by the end of the second quarter. Barclay's analyst Brian Johnson expects those targets to remain on track but said Tesla may give more guidance on when it will reach production of 40,000 models per month. At one point, Tesla had 500,000 people on a waiting list for the Model 3, but it's not clear if all of them are continuing to wait.

Tesla has lofty targets, including building a plant in China and production of a small SUV in 2020. It's also on the hook to build charging stations for its network of semi trucks. All that costs money, which Tesla is burning through at a fast clip.

Tesla ended the fourth quarter with a cash balance of $3.4 billion; Johnson forecasts a $1.3 billion decline in cash this year. Investors will want to know what Tesla is doing to stem that flow and whether the company will try to raise additional funds this year.

Business on 02/08/2018