Monday, 28 May, 2018

Key Takeaways From Tesla, Inc.'s Fourth-Quarter Shareholder Letter

Nellie Chapman | 09 February, 2018, 10:16

Tesla reported negative free cash flow of $276.7 million, compared with $1.4 billion in the previous quarter, and $969.8 million in the fourth quarter past year.

Tesla Motors Inc. reported a growth in used-car sales and completed deliveries, in the midst of a continued Model 3 production delay, according to the company's earnings yesterday. The company ended the quarter with $3.37 billion in cash. Elon Musk made history by launching Tesla Roadster on top of Space X Falcon Heavy spacecraft which cruised through the space.

Excluding items, the company lost $3.04 per share, above the $3.12 per share loss expected by analysts.

Key drivers for heightened Model 3 demand, Tesla noted, were the arrival of some Model 3 units at select Tesla stores and "numerous positive reviews, including Automobile Magazine's 2018 Design of the Year award". Tesla said it is deferring some capital expenditure payments for the Model 3 to the first quarter of 2018.

The move came right after Tesla gave an update on Model 3 production to state that they are still on track for 2,500 units per week by the end of next month. Tesla also notably maintained its target for a Model 3 production rate of 5,000 units per week by the end of Q2. Model S and X deliveries grew 10 percent globally over Tesla's prior record in the third quarter, and were up 28 percent compared to the fourth quarter of 2016.

"In my view, it's a crutch that will drive companies to a local maximum that they will find very hard to get out of", Musk said. For example, he said, the company has almost completed an automated battery module assembly line which will speed production at its Nevada battery factory. The company was planning to make 500,000 vehicles in 2018.

But it said revenues rose to $3.29bn, up from $2.28bn, and that it was addressing Model 3 production issues.

Even if Tesla makes the standard interior available, the Model 3 will still start at $44,000 until the standard battery pack is available. Tesla also said reservations for the vehicle remain "stable" despite the delays, but it didn't give a total.

Tesla updated today the delivery window of many Model 3 reservation holders in the United States - resulting in delays for many and a confirmation Model 3 will be available with a dual motor powertrain before the standard battery pack.

- The mean earnings estimate of analysts was unchanged in the last three months. But Musk has long argued that LIDAR is too expensive and too bulky for Tesla's vehicles. Still, Musk said he is "cautiously optimistic" that Tesla will be profitable this year.

Musk said that they'd want to do active photon generation in the radar range because that's something that can see through small occlusions, so it's not possible to do it from visual info and apply machine learning to work out variances in lighting conditions, etc.

© 2018 Associated Press under contract with NewsEdge/Acquire Media. But how about all the other cars that are more than a year old?

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