Elon Musk said 'breakthrough' Autopilot features to arrive soon (TSLA)

Randal Sanchez
August 2, 2018

Electric vehicle maker Tesla has racked up a record $717.5 million net loss in the second quarter of 2018, twice the previous year's number. While investors will be watching production numbers and cash burn, CEO Elon Musk is watching short-sellers. Musk repeated his view that profitability is just around the corner, thanks to a ramp-up in production of Tesla's Model 3 electric auto.

The Fremont factory is expected to build approximately 50,000-55,000 Model 3s in Q3. "I hope you'll accept my apology", he said directly RBC Capital caller Joseph Spak. Investors on Wall Street, meanwhile, were anticipating revenue to fall somewhere in the $3.791 billion range and a loss of $2.90 per share.

Tesla shares were up 5 per cent at US$316.45 in after-market trading on Wednesday.

Musk also stated that Tesla was hiring video game developers to build games which integrate with the Tesla's touchscreen, the driver's smartphone, and the vehicle itself.

Stuart Bowers, VP of Engineering at Tesla, mentions that the automaker has been working on its "on ramp to off ramp solution" for Autopilot, which can take control of the vehicle from the time it enters the highway until it hands the controls back off to the driver. Musk and CFO Deepak Ahuja admitted that even production of the auto was plagued with problems; Tesla launched a new production line in a massive tent, shuffled its worker base, and worked round the clock to hit the 5,000-Model 3s-a-week target. "That said, significant progress has been made in the last few months, and GA3 is now expected to reach a production rate of 5,000 per week very soon".

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Bloomberg News reported earlier Wednesday that the company would look to China to at least partially fund the US$5 billion cost, citing a person familiar with the plans, who asked not to be identified as the matter is private. Honestly, I really think there's no excuse for bad manners, and I was kind of violating my own rule in that regard.

Cash from selling the Model 3, which starts at $US35,000 but runs far higher with options, is key to holding off more borrowing and turning a profit.

The period ended with US$2.78 billion in cash, after the company spent $609.8 million in capital expenses during the quarter.

On the call, Musk also said he expects the company to avoid returning to the markets for capital and to be "essentially self-funding on a go-forward basis".

Tesla management has previously predicted that it would turn a profit sometime in the third quarter.

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