Leading car innovation company Tesla, has revealed two big pieces of news this Wednesday: First, it has re-affirmed that the production of its next car, the Model 3, would begin in July, and second, that the company is entering the second quarter of 2017 with an impressive $4 billion cash-on-hand.
The company presented this information while revealing its first quarter earnings. The company has reached out to the market on multiple occasions for the sake of grabbing extra capital, and announced that year-to-date capital expenditures of the company would be just above $2 billion by the time the production of Model 3 begins. Model 3 is Tesla’s economical variant which is expected to provide it with a wider market presence, and also justify its expanding valuation.
The company did report a net loss of $1.33 per share on revenue of $2.7 billion. This was well in excess of Wall Street expectations, which were pegging a loss of 83 cents per share on $2.61 billion in revenue. However, this is a piece of the report which isn’t getting as much attention as it would have for any other company. In Tesla’s case, all eyes are fixed upon Model 3 and whether the company will be able to keep production on schedule.
This April, Tesla kept on increasing its stock value and surpassed Ford in terms of valuation. The company backed its success by saying that the production and delivery rates of its vehicles rose in the first quarter at a rate faster than what Wall Street expected. The shares of Tesla have not varied much since and they still value more than $50 billion, which is significantly ahead of Ford.
This April, Elon Musk also gave a hint regarding a semi-truck from Tesla. It is also expected that the final production version of Model 3 will be unveiled this July. It is very certain that with an economical price tag of $35,000, Model 3 is sure to get in a lot of interest, though referring $35,000 as economical is mostly a matter of perspective.
Tesla still expects to deliver somewhere between 47,000 to 50,000 vehicles in the first half of the year. It is also likely that the production of Model 3 would hamper the sales of Model S, and therefore, sales figure may encounter some problem. Tesla also acknowledged the faults in its earning report.
In a statement, the company said:
Moving past Q2, particularly as Model 3 becomes available, one of our challenges will be to eliminate any misperception about the differences between Model S and Model 3. We have seen a belief among some that Model 3 is the newest and more advanced generation of Model S. This is not correct. Model S will always have more range, more acceleration, more power, more passenger cargo room, more displays (two), and more customization choices, and Model S, X and 3 will all have equivalent Autopilot functionality. We will continue to clearly communicate these distinctions to avoid any misperceptions.
