Tesla Posts Record Quarterly Loss of $619 Million USD

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Musk goes on the defensive.

Last month, Tesla reported that it had delivered 26,150 vehicles in the third quarter, a 4.5 percent rise on the same period of a year ago, but added that "production bottlenecks" had left the company behind its planned ramp-up for the Model 3.

Tesla's third-quarter automotive gross margin was 18.7%, declining 628 basis points (bps) from second-quarter 2017 due to considerable rise in manufacturing expenses of Model 3.

Tesla said new features will be coming for its less-ambitious $5,000 Enhanced Autopilot package in the next few months. Preorders for the Model 3 are estimated to total about 500,000. That was a far bigger decline than Wall Street had predicted.

Musk also briefly touched on where Tesla is with respect to autopilot. It is positive, as 83 investors sold Tesla Inc shares while 159 reduced holdings. He expects margins to expand next year. Its previous production goal of 5,000 Model 3 vehicles a week in December of this year is now the company's goal for late in the first quarter of next year.

The delay in Model 3 production is not likely to dampen demand for the vehicle, said Jessica Caldwell, executive director of industry analysis for Edmunds. The company produced 260 Model 3s and delivered 222, missing the production target of 1,500. The combined complexity of module design and its automated manufacturing process has taken this line longer to ramp than expected. This battery should make the Model 3 cost-effective, but progress on it was hampered by problems with subcontractors, the major degree of automation in the gigafactory where the Model 3 is manufactured, and other issues in the third quarter of the year, leading to delays.

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That's more troubling than it might seem. A production rate of 5,000 a week won't be reached until the end of March, rather than the end of next month.

Tesla's China factory will primarily be built for the Model 3, and that's clear because Musk wants to make cars more affordable to the middle class Chinese population, which is expected to be about 76% of the population by 2022. Then it was pushed until November 16, explicitly so that resources could be diverted to deal with Model 3 bottlenecks. Several analysts slashed their price targets following the Tesla Inc (TSLA) 3Q 2017 earnings release, and Tesla Inc (TSLA) stock slumped to its lowest level in months. But a growing number of analysts are now turning bearish. (NASDAQ:TSLA) by 85.0% during the third quarter, according to the company in its most recent Form 13F filing with the SEC. "Another analyst firm said that Musk needs to 'stop over promising and under delivering".

In Tesla's third-quarter update, the automaker shared lots of new information about its business, including one on Model 3 production.

That has some anxious that the automaker could run into a cash crunch.

But the Model 3 is its first mainstream offering and it comes to market at a time when Tesla's cash reserves are strained and as competitors are determined to challenge it in the emerging electric vehicle segment.

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