Ducking analysts’ questions has a price: $2 billion.Tesla Inc investors gave a rare rebuke to iconoclastic Chief Executive Elon Musk on Wednesday after he cut off analysts asking about profit potential, sending shares down 5 per cent despite promises that production of the troubled Model 3 electric car was on track.
The company stood by a previously announced target of building 5,000 Model 3s per week by the end of June.Tesla‘s capital expenditures declined in the quarter and the company cut its spending forecasts for 2018, saying it would spend less than $3 billion. Tesla spent $3.4 billion in 2017. (
https://bit.ly/2jn15SB)Investing.com analyst Clement Thibault said the reduction was noteworthy, “but in the long run given challenges that lay ahead of Tesla, I don’t think it is going to make or break the company.”Tesla “is definitely not in a minimizing cost stage,” Thibault said.Free cash flow, a key metric of financial health, widened to negative $1 billion in the first quarter from negative $277 million in the fourth quarter, excluding costs of systems for its solar business. Analysts had not expected so much spending, predicting hundreds of millions of dollars less in so-called cash burn, according to Thomson Reuters data.
5,000 Model 3s per weekMusk’s ability to run Tesla is crucial as the company strives to efficiently and profitably build its first vehicle intended to be produced at high volume, the Model 3.Musk acknowledged error recently in over-automating the Model 3 assembly-line, which has resulted in production delays, but it is still unclear how long and costly it will be to unwind this mistake.Delayed Model 3 production also comes as a slew of competitors bring new electric vehicle models to market.WATCH: Is Elon Musk an innovator or a showman? (Feb. 2018)
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Record lossTesla reported a record loss of $709.6 million, or $4.19 per share, for the first quarter ended March 31, compared with a loss of $330.3 million, or $2.04 per share, a year earlier.Excluding items, Tesla had a loss of $3.35 per share. Analysts had expected a loss of $3.58 per share, according to Thomson Reuters I/B/E/S.The company said it ended the quarter with $3.2 billion in cash after spending $655.7 million in quarterly capital expenses.The lack of Model 3 revenue has exacerbated Tesla‘s cash burn as the company continues to spend on its assembly line and prepares for new investments on multiple projects in the pipeline, such as the Model Y crossover and its Gigafactory.The Model Y is just one of many projects in the pipeline for Tesla, which also launched a TeslaSemi and a new Roadster in recent months.(Reporting by Alexandria Sage in San Francisco and Sonam Rai in Bengaluru Editing by Peter Henderson, Matthew Lewis and Lisa Shumaker)
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