2017-05-04 12:15:04
Tesla, Reporting Bigger Loss, Emphasizes Gains in Production and Sales

The electric-car maker Tesla said on Wednesday that its losses had widened in the first quarter, but that sales and revenues had grown rapidly as the company prepared for the critical launch of a mass-market model.

The company said it lost $397 million in the quarter, compared with a loss of $282 million in the same period a year earlier.

But the automaker emphasized that production had increased by about 65 percent from last year’s first quarter, to 25,000 vehicles, and that revenue had more than doubled, to $2.7 billion. (The figure includes revenue from SolarCity, the solar-panel maker that Tesla merged with last year; automotive revenue alone was $2.3 billion.)

The gains on the production side are being watched closely by investors and analysts who are seeking evidence that Tesla can meet its plans to begin manufacturing the Model 3, its first mass-market offering, this summer.

“Model 3 development is nearly complete, as we approach the start of production,” Tesla’s chief executive, Elon Musk, said in a quarterly update posted on the company’s website.

Investor bullishness about Tesla has been growing. Last month, its rising stock price pushed its market capitalization past those of General Motors and Ford Motor, indicating sky-high hopes for the company’s prospects in the hypercompetitive auto industry.

Tesla shares were down 2.4 percent, to $303.50, in extended trading after the earnings announcement and Mr. Musk’s conference call with analysts; they remain almost 70 percent above where they were five months ago.

Analysts are hoping that Mr. Musk will focus more on incremental improvements in sales, production schedules and earnings than on long-term, big-picture goals geared toward promoting clean energy.

Mr. Musk has pledged to begin producing the Model 3 this summer at Tesla’s plant in Fremont, Calif., which was once operated jointly by Toyota and General Motors.

The Model 3 — a compact, electric car that is expected to sell for about $35,000 — is considered Tesla’s pivotal product.

The company has built intense loyalty and demand for its two luxury offerings, the Model S sedan and the Model X sport utility vehicle. Both cost more than $90,000 with options, and their appeal is limited to a small number of wealthy customers.

The introduction of the Model 3, however, puts Tesla in the mainstream of the automotive market. And Mr. Musk has created high expectations not only for the car’s performance and quality, but for its widespread availability.

In the conference call with analysts, Mr. Musk said the company was moving quickly to further automate its assembly plant to include Model 3 production, and was hoping to build 5,000 vehicles a week by sometime this year.

“Model 3 will be roughly comparable to the best high-volume vehicle production lines in the world,” he said.

Anticipation for the new vehicle has caused some confusion among consumers that the Model 3 could be more technologically advanced than Tesla’s current models.

Mr. Musk declined to say whether orders for the Model S had fallen because buyers were waiting for the Model 3. But he underscored that the Model S would continue to set the brand’s benchmark by offering its highest level of assisted-driving capability and other features.

Industry analysts said the quarterly results were a secondary issue given the weight of expectations for the Model 3. “A flawless launch of the Model 3 is critical to the company’s future success,” said Jack R. Nerad, an analyst with the auto-research firm Kelley Blue Book.

Mr. Musk said on the call that he was pleased with the company’s quarterly results. “We are executing well,” he said. Yet even as he updated investors on the progress of the Model 3, he was already looking ahead to plans to expand into electric pickups and heavy trucks.

“I am absolutely confident that electric vehicles will occupy every segment without exception,” he said.

Tesla expects to make 500,000 cars a year by 2018, with the Model 3 accounting for the bulk of the production. That translates into a fivefold increase in its manufacturing pace.

Tesla is also dealing with growing pains in its labor force. Some production employees have accused the company of suppressing efforts to unionize its work force.

Last month, the United Auto Workers — the union representing hourly workers at the three big Detroit automakers — filed charges with the National Labor Relations Board asserting that Tesla was trying to block its workers’ organizing efforts.

Tesla has said the allegations “are entirely without merit.”