Tesla posted another big loss for the second quarter as it stepped up spending for the launch of its first mass-market long-range electric car.But as massive as the loss of $336 million, or $2.04 a share, reported Wednesday might appear, it came in lower than analysts had expected. S&P Global Market Intelligence said analysts had projected the loss would come in at $437 million, or $2.38 a share. The loss was up 1.8% from $330 million in the same quarter a year ago.Investors are encouraged that Tesla appears to be on track to eventually cash in on its $35,000 Model 3 electric car, which joins two luxury models costing at least twice as much. Despite the high rate of spending, investors drove Tesla shares up 7.6% in after-hours trading to $356.52. The company recorded revenue of $2.8 billion, also outpacing S&P projections of $2.5 billion. "I really think this is probably the best I’ve ever felt about the company," CEO Elon Musk said on a conference call, calling it "an incredible milestone" and saying he was thrilled with early positive reviews and orders for the Model 3.Musk and Chief Financial Officer Deepak Ahuja warned in a letter to investors that Model 3 production "will be tiny" in the third quarter, underscoring the gradual start in manufacturing capacity for the mass-market vehicle.
But the company said it's receiving 1,800 net new reservations per day for the car. Musk said the company had accumulated 455,000 net reservations over the last year and a half, below the 500,000 he had estimated off-hand during a media event Friday. The company handed the first 30 units of the Model 3 to employee buyers at Friday's gathering. After Tesla acknowledged poor production quality on early versions of the ultra-luxury Model X crossover, investors are watching closely to see how quickly the company can begin making the Model 3 at scale.
Tesla expects to make 1,500 Model 3 units in total during the third quarter and end the year at a pace of 5,000 per week. Production will reach 10,000 per week by the end of 2018, Musk said. "People should have absolutely zero concern about" that objective, Musk said. Still, the car won't be available to non-employee buyers who ordered it in early 2016 until the last three months of this year. And anyone who places a refundable deposit for the Model 3 today won't get it for 12 to 18 months, the company has said. "We wish we could do all of this faster and get everyone’s Model 3 to them right away," Musk and Ahuja said in their letter, but they emphasized the need for quality as the company's Fremont, Calif. factory slowly gears up.
To speed up manufacturing, the company said it "significantly" reduced complexity on the Model 3, which is available in only 100 different configurations, compared to more than 1,500 for the Model S sedan. "We aspire to learn from the mistakes of the past and I think we largely have," Musk said.
In the second quarter, Tesla delivered 22,026 vehicles, up nearly 53% from a year earlier despite a shortfall in certain battery packs during the period. The company projected growth in sales in the second half of the year. Musk also said the company would triple the number of charging stations meant for intercity travel, called "superchargers," by the end of 2018 and claimed the company's sales per square foot in its stores are the highest in the retail industry.