Musk's Tesla Tantrum Costs Him $300 Million

03 May, 2018, 20:18 | Author: Priscilla Morrison
  • GettyImages-903063748

Shares in Tesla, which is based in Palo Alto, California, fell more than four percent in after-hours trading after the earnings report.

Tesla tore through $745.3 million in cash in the quarter, due largely to the slow production ramp-up of the Model 3 mass-market electric sedan.

During the call Mr Musk acknowledged that the firm had over-automated the Model 3 assembly-line, which has resulted in production delays, but it is still unclear how long and costly it will be to unwind this mistake. But Musk says the tech will be fully developed "by end of next year".

Tesla stocks dropped Wednesday night after CEO Elon Musk engaged in a highly unusual and combative earnings call that included criticizing reporters for asking "boneheaded" questions about problems plaguing the electric automaker. "Next, next, next. Bonehead questions are not cool". "I think that if people are concerned about volatility they should not buy our stock", Musk said on a conference call with investors, according to TheStreet. Sorry. These questions are so dry.

After Musk said it looked like Tesla would turn a profit later this year, he got testy with analysts as they brought up questions about a possible cash crunch.

In case his frustration with Wall Street was not already evident, Musk then invited YouTube host and Tesla enthusiast Gali Russell to take the floor with crowdsourced questions on behalf of retail investors.




Tesla is also implementing an initiative to change the quarterly production pattern of its two flagship vehicles - the Model S and Model X - across various worldwide regions. "We will not be starting production of Model Y next year".

The proposal came ahead of the company's annual meeting that is scheduled for June 5.

Tesla's capital expenditures declined in the quarter and the company cut its spending forecasts for 2018, saying it would spend less than $3 billion (roughly Rs. 20,000 crores). During the weeks preceding the shutdown, estimates from Bloomberg's Model 3 production tracker showed that Tesla was only producing vehicles in the ~1,000 range.

Christian Stadler, of Warwick Business School, told Express.co.uk that, "if Tesla carries on the way it is going it will not survive, I think investors are right to be anxious".

Free cash flow, a key metric of financial health, widened to negative $1 billion (roughly Rs. 6,700 crores) in the first quarter from negative $277 million in the fourth quarter, excluding costs of systems for its solar business. The cash burn could put pressure on the company to borrow more or sell additional shares to raise more cash.

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