Tesla told investors Wednesday that it burned through a record amount of cash last quarter, posting a $785 million loss for the quarter.
The company's stock initially rose 2.2 percent on the news because revenue came in $110 million higher than expected.
The company has not reached its goal of producing 5,000 Model 3 cars a week, reporting a maximum production of 2,270 cars a week the week before it shut down the Model 3 assembly line the third week in April, which it said was to remove production bottlenecks.
During the quarterly earnings call, CEO Elon Musk reiterated that he remains optimistic that the company can not only reach its goal of producing 5,000 Model 3's a week later this year, but also that it might eventually build 10,000 cars a week. It was unclear whether he was referring specifically to the Model 3 or to total Tesla production. Just last week, Musk sent a letter to employees that he expected to reach 6,000 Model 3s per week, according to Reuters.
Musk also announced that the company would be restructured in the next few months in an effort to cut costs. The earnings statement released ahead of the call showed expenses have already been cut. Musk wouldn't specify how, but this could include investments in future products such as the Model Y SUV, the Tesla Semi truck, and/or the promised new Roadster. Musk added that production of the Model Y would be "revolutionary in manufacturing, because we don't want to go through this again."
With $2.7 billion cash on hand, Musk reiterated that he didn't want to raise more money in debt or stock to give the company a bigger cash cushion.
2018 Tesla Model 3
For Tesla, overall financial outlook and future product availability are closely tied. Here at Green Car Reports, we care more about the products than corporate profit-and-loss statements, but in Tesla's case, with hundreds of thousands of consumers waiting for cars to be delivered, the financial outlook can be key.
Some financial analysts had projected that Tesla, losing more than three-quarters of a billion dollars a quarter and with less than $3 billion cash on hand, could run out of money this year unless it raises more cash. That would be bad news for buyers who have deposits down on Model 3s. Musk was emphatic that he doesn't want to raise any more cash in stock or debt, and said he was "optimistic" that the company could reach its production goals for the Model 3 and become profitable.
Tesla also sold $500 million in clean vehicle credits to other manufacturers to help stem losses—a regular practice, but a tool the company had not exercised at this time last year.
Teaser for Tesla Model Y electric SUV due in 2019
Musk said the main bottleneck in Model 3 production has been producing enough battery packs at the Gigafactory in Nevada to feed the Model 3 assembly line. (Along with the battery packs, the Gigafactory also makes the motors and charging systems for the Model 3.) Based on recent improvements in the Gigafactory line, Musk said the plant can now produce 3,000 battery packs per week, and that he expects total output to ramp up "soon," as the company smooths out the process and reduces downtime at the Gigafactory.
Final assembly of the cars in Fremont is the next hurdle for the Model 3, he said. More factory shut-downs are planned this month for maintenance and to speed production of the cars.
The routine quarterly earnings call was considered a make-or-break point for Tesla. Investors and enthusiasts were looking to see if Tesla had turned a corner in production to become profitable, or if the company would continue to burn through money at an unsustainable rate. What emerged was something murkier than either: more of the same efforts to improve assembly for the Model 3, more big losses, more efforts to cut expenses to buy time, and ever more ambitious goals for future sales and revenue.