Tesla Model 3 launch remains on track
Investors cheered as Tesla shares rose 1.5 percent in after-hours trading to $266.67 a share, up $4.16.
On Wednesday, Tesla assured consumers that the launch of the Model 3 remains on track as the company issued its fourth-quarter results that cut its losses and beat revenue estimates. The Tesla Model 3 will be the first mass-market electric car.
Tesla is under intense scrutiny as it transitions its focus to its high-production model from its two current vehicles, the luxury Model S sedan and the Model X crossover. In the company’s earnings release, they said that the Model 3 is “on track” with limited production due to start in July.
The automaker plans to keep ramping up Model 3 production until the company reaches 5,000 cars a week in the fourth quarter and 10,000 cars a week in 2018. The company has taken more than 400,000 reservations for the Tesla Model 3. This vehicle could be the breakthrough car when it comes to the electrification of the automotive industry.
To start production, Tesla will invest $2 billion to $2.5 billion to ramp up its factory. Meanwhile, Tesla will still need to keep up the excitement about its two luxury models, which will continue to be big profit contributors for the automaker.
The automaker announced that it intends to deliver 47,000 to 50,000 Model S sedans and Model X crossovers for the first half of the year – a growth of 61 percent compared to the same period last year.
CEO Elon Musk offered reassurances to analysts, during a conference call, about the possibility that President Trump’s administration might eliminate incentives or subsidies on electric cars.
“It would be fine to get rid of incentives and subsidies, but that should be uniformly applied to all industries,” Musk said. Musk said that Tesla might actually benefit more from their demise, more so than the traditional automakers.
Tesla narrowed its earnings in the fourth quarter and still came in ahead of expectations.
The automaker said it lost $121.3 million, or 78 cents per share, compared to $320.4 million, or $2.44 per share, last year on an unadjusted basis.
On an adjusted basis, Tesla lost $106.5 million, or 69 cents per share, compared to $264.8 million, or 75 cents per share, in the same quarter last year. This was a big improvement over the $1.18 per share loss that a consensus analyst expected, Bloomberg News reported.
The revenue was slightly ahead of analysts’ estimates, coming in at $2.18 billion.
Tesla also announced that its chief financial officer, Jason Wheeler, is leaving. Wheeler will be replaced by the company’s old CFO, Deepak Ahura.