Tesla Posts Loss, Boosting Pressure to Speed Output of Model 3

Tesla Posts Loss, Boosting Pressure to Speed Output of Model 3

Tesla Posts Loss, Boosting Pressure to Speed Output of Model 3

Tesla warned that its adjusted gross margin would decline to about 15 percent due to a higher mix of lower-margin Model 3 deliveries in the fourth quarter, but then recover in the first quarter of 2018.

The company said it would cut production of its Model S and Model X vehicles to redeploy resources towards the Model 3.

And the problems will continue. Because of delays at its battery facility in Nevada, Tesla said it now expects to be making 20,000 Model 3s per month by the end of the first quarter of 2018. Equities research analysts anticipate that Tesla will post ($6.70) EPS for the current year. The insurer reported a net loss of $87 million, or 8 cents a share, in the quarter to September 30, after net income of $571 million, or 51 cents a share, in the same period a year ago.

The company also reported its biggest quarterly loss ever, sending shares down almost 5 percent after hours as the loss was bigger than analysts had expected. Wall Street is only getting neutral on the stock, with 7 of analysts who cover TSLA having a buy-equivalent rating. This is a significant milestone as the Tesla fleet is now about 100 times larger than it was five years ago, just before the launch of Model S. Musk had initially set a target of December for that production. The company opened 18 stores and service stations worldwide during the quarter, and set up 126 new Supercharger stations to try to prepare for the increase in demand from Model 3 buyers.

Tesla stock closed at $321.08 Wednesday, down 3.15%, and was falling further in after-hours trading. Tesla's other vehicles, the Model S and Model X, will be given less attention as the company shifts focus to getting the Model 3 up to speed.

Last month, Tesla reported it delivered 26,150 vehicles in the third quarter, a 4.5 percent rise on the same period of 2016.

Revenue was a stronger point for the automotive company, coming in at $2.98 billion, ahead of the $2.39 billion that analysts called for.

Results from electric cars maker Tesla Inc (NASDAQ:TSLA) are likely to be all about the ramp-up of production of the new model 3.

Tesla was already facing backlash from its shareholders over production of the Model 3, which is the first vehicle that's priced more for the average consumer at $35,000. Sustainable energy generation and storage is a critical part of Tesla's mission and will drive long-term revenue growth and profits.

Shares of Tesla have fallen almost 17 percent from a 12-month high of $385 in September, but are still up 50 percent from January fueled by belief in the long-term prospects of the company.

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