Tesla on Wednesday posted its worst ever quarterly loss and said its Model 3 production target remains on track, expecting to hit about 5,000 per week in about two months. While that sounds alarming, losses were actually less than analysts expected.
Tesla said it produced 2,270 Model 3s per week in the last week of April, up from 2,250 in the second week of the month. Tesla noted three straight weeks of producing more than 2000 units of the Model 3. The company said it expects to move Model 3 gross margin from negative in Q1 to close to breakeven in Q2, and “highly positive” in Q3 and Q4.
Tesla said it still plans to build 5,000 units per week in about two months, but qualified that statement by pointing out that “prior experience has demonstrated the difficulty of accurately forecasting specific production rates at specific points in time because of the exponential nature of the ramp.” Once it hits 5,000, Tesla will begin to build other versions of the model 3, like the shorter-range base model and all-wheel-drive variants. Tesla eventually aims for 10,000 units per week.
In order to achieve 5,000 per week, Tesla plans to take additional days of downtime during the second quarter. Tesla did a similar thing in April, suspending production in order to remove constraints and speed up the build process.
Tesla said that the Model 3 is the highest quality vehicle the company has ever produced, much of that owing to automation. Tesla CEO Elon Musk recently admitted, though, that automation did slow down production at one point. The company also says automation has improved safety in its facilities, an issue that has dogged the company in recent months.
Tesla reported a loss of $709.6 million, or $4.19 per share, for the first quarter ended March 31, compared with a loss of $330.3 million, or $2.04 per share, a year earlier.
Excluding items, Tesla had a loss of $3.35 per share. Analysts had expected a loss of $3.58 per share, according to Thomson Reuters I/B/E/S.
The company said it ended the quarter with $3.2 billion in cash after spending $655.7 million in quarterly capital expenses.
Shares of the Palo Alto, California-based company were up nearly 1 percent at $303 in extended trading.
The lack of Model 3 revenue has exacerbated Tesla’s cash burn as the company continues to spend on its assembly line and prepares for new investments on multiple projects in the pipeline, such as the Model Y and its Gigafactory in Nevada.
Moody’s, which downgraded Tesla last month, has estimated that Tesla will burn about $2 billion in cash this year.
This report includes material from Reuters.