Model 3 bottlenecks cause Tesla to burn more than just rubber

Model 3 bottlenecks cause Tesla to burn more than just rubber

"That's our focus right now".

The electric carmaker posted its latest earnings results Wednesday, and the filings show Tesla's money stockpile shrank from $3.4 billion to $2.7 billion the first three months of 2018.

Elon Musk, co-founder of Tesla.

He then took several questions in a row about plans for a self-driving vehicle network and other long-term projects from the host of a YouTube channel focused on investing, praising the questions as not boring. Four analysts have issued estimates for Tesla's earnings, with the lowest sales estimate coming in at $3.02 billion and the highest estimate coming in at $3.52 billion.

Tesla just made it clear that robots will be key to the company's future despite the problems automation has caused with the production of the Model 3. Tesla also cited that the vehicle has lighter wiring and fewer controllers, connectors, and CPUs compared to "average vehicles".

Model 3 production surpassed 2,000 cars per week only in the past month or so, which is far behind Musk's initial timeline.

Tesla did not break out a cash flow calculation as it has in previous quarters.

The company said in a note to investors Wednesday that Model 3 production is on the rise and that it expects profitability in the second half, under generally accepted accounting principles.

Following consistent delays in Model 3 production, Tesla is attempting to fine-tune their automation strategy to solve production bottlenecks.

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E-Mini futures for the S&P 500 crept 0.3 per cent higher, with overnight results from Kraft Heinz, Tesla and Spotify in focus. The Stoxx Europe 600 Index fell 0.2 per cent as of 8.06am London time, headed for the largest fall in more than a week.

Tesla once again suffered stops and starts in missing its quarterly production goals for its flagship Model 3 sedan, but reassured investors that it was on pace to crank out 5,000 vehicles a week by July. Part of the solution for this is to restructure and reorganize the company and also cut back dramatically on the number of third party contractors that it uses. "Fundamentally, we believe that thinking about a factory in the same way that people think about the product itself creates the potential for a step change in manufacturing that will create enormous benefits for quality, cost, efficiency and employee safety", the company said.

"We have temporarily dialed back automation and introduced certain semi-automated or manual processes while we work to eventually have full automation take back over", the company said. Excluding one-time expenses such as stock-based compensation, the company lost $US3.35 per share.

The giant loss in a critical quarter for the 15-year-old company fell short of Wall Street estimates.

Tesla reported losses of $3.35 per share, beating analyst forecasts of losses of $3.58 per share.

During the quarter the company burned cash at a rate of $57 million per week.

Tesla shares were up less than a per cent to US$303 in after-market trades that followed release of the earnings figures.

Investing.com analyst Clement Thibault said the reduction was noteworthy, "but in the long run given challenges that lay ahead of Tesla, I don't think it is going to make or break the company". At the end of a year ago the company had a total of $9.5bn in long-term debt.

Tesla said its spending had been trimmed and the company would spend less than $3 billion in capital expenditures in 2018, below its 2017 total of $3.4 billion.

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