Tesla Reports Another Loss as It Struggles With Model 3

The electric-car maker Tesla lost nearly $800 million in the first three months of the year, the sixth quarter in a row it has lost money, the company said Wednesday.

Tesla is facing numerous challenges. Its plan to mass-produce the Model 3, a car that was supposed to lift the company to profitability, is well behind schedule. It has come under scrutiny for the safety of its Autopilot technology and for the working conditions in its factory. And investors have become skittish as it burns through cash.

In the first quarter, that burn continued, consuming $745 million, a significant increase. In the previous three months, the company used $112 million in cash.

Yet Tesla’s chief executive, Elon Musk, said Wednesday that the carmaker was on the verge of a decisive upturn. He asserted that Tesla would make money in the second half of this year — if it could meet its latest goals for Model 3 production.

Mr. Musk has made bold predictions in the past. He once said that Tesla would increase Model 3 production so quickly that sales would climb to 500,000 cars this year.

Less than a year ago, Mr. Musk had hoped to make 20,000 Model 3s a month by the end of 2017. On Wednesday, the company said it had produced more than 2,000 a week for three straight weeks before halting production in mid-April. It said its profitability goals for the second half of the year hinged on making 5,000 a week.

“We have good visibility of our path to fully ramp and stabilize Model 3 production this year,” Mr. Musk said in a letter to investors on Wednesday.

Tesla’s shares were up modestly in extended trading after the earnings announcement, at slightly more than $300. But they have lost more than 20 percent of their value since their peak last year, when Tesla surpassed Detroit’s automakers in market value.

While Tesla still has many fans and believers, analysts now tend to take a cautious look at Mr. Musk’s pronouncements.

“Tesla unfortunately has a track record of delays, missed deadlines and not delivering what has been promised over much of its history,” said Karl Brauer, executive publisher of Kelley Blue Book.

In a report issued before Tesla released its results, a Barclays Capital analyst, Brian Johnson, told investors that he believed the company is “fundamentally overvalued.”

Tesla has not had a profitable year since it was founded in 2003. Its last profitable quarter was the third quarter of 2016, when it reported net income of $22 million.

The loss in this year’s first quarter is the latest sign of trouble for the company. In March, Moody’s Investors Service lowered Tesla’s credit rating over concerns about the slow pace of Model 3 production and warned that the company could face a cash crunch late in the year without an infusion of capital. California’s job-safety watchdog is looking into injuries at the company’s plant in Fremont, and workers have complained about dangerous conditions there.

Federal safety experts are also investigating the fatal March 23 crash of a Tesla Model X sport-utility vehicle operating with its Autopilot driver-assistance system engaged. The driver, Wei Huang, a software engineer at Apple, died in a hospital shortly after the crash.

In recent days, the executive heading up Tesla’s Autopilot team and another running its operations in Europe have left the company. On Tuesday, Nikola Corporation, a start-up that is developing hydrogen-powered trucks, filed a lawsuit asserting that Tesla’s own electric truck infringes on the company’s patents and designs. The suit was filed in United States District Court in Phoenix.

Amid all of those issues, the Model 3 is perhaps the most serious area of concern. With a starting price of $35,000, the car is meant to be Tesla’s most affordable and top-selling vehicle. The company has been counting on a quick increase in sales to bolster revenue and to enable Tesla to pare losses and pay off bonds and other borrowing while still investing heavily in future vehicles.

Mr. Musk has acknowledged that Tesla erred in trying to build a highly automated production line to assemble the Model 3, noting that getting robots and other machinery to work in harmony has proved to be more difficult than he expected.

Content originally published on https://www.nytimes.com/2018/05/02/business/tesla-earnings-model-3.html by NEAL E. BOUDETTE