Here's what to expect from Tesla's earnings report

Ashley Carr
August 5, 2017

At an event to deliver the first 30 Model 3s last week, CEO Elon Musk repeated his warning that Tesla will be in "manufacturing hell" as it ramps up production. The company bought solar panel maker SolarCity late a year ago and said it began taking orders for its new solar roof tiles in the second quarter and recently began installations.

And there are questions about whether the Model 3 will cut into sales of the the higher-end Model S, which could put pressure on Tesla's margins.

Tesla expects to manufacture 5000 Model 3 cars a week by the end of 2017 and later plans to expand the production to 10,000 cars per week by 2018.

In the quarters ahead, Tesla will need to prove it can increase Model 3 production as fast is it says it can.

Perhaps what's most surprising is the reported uptick in orders for the Model S sedan and Model X SUV orders. "This is the best I've ever felt about Tesla to be frank", Musk said on the call to discuss second quarter earnings.

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The Model 3 is Tesla's first mass-market vehicle and Musk has already admitted it will be hard to meet its high demand. On average, 19 analysts polled by Thomson Reuters expected loss of $1.80 per share for the quarter. Model S and Model X combined deliveries in the quarter grew nearly 53% globally versus the prior year, even though the luxury vehicle market was essentially flat. The company said it expects to deliver more Model S and Model X vehicles in the second half than the first, without providing a specific target.

Tesla has received 500,000 orders for the Model 3. Tesla may experience some fluctuations in production rates, Elon Musk said, but "people should have zero concerns" about the company's ability to increase production of the new offering.

The automakers's latest earnings report wasn't all positive news. As more details about the auto, its features, and the long S-Curve production timeline leaked out, its raised at least some uncertainties about how successful this vehicle will actually be.

The company's net loss attributable to shareholders widened to $US336.4 million in the second quarter ended June 30, from $US293.2 million a year earlier. It's betting that the $35,000 Model 3, with a 220- to 310-mile range and price tag close to the U.S. median, will be the auto to do it.

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