TEMPO.CO, San Francisco - Tesla Inc said on Wednesday, Feb. 8, it was sticking with Chief Executive Elon Musk`s revised production targets for its Model 3 sedan, cheering investors who have put up with two delays, but the electric automaker's plans to raise spending this year underscored its growing need for cash.
Reflecting the mixed fourth-quarter report, shares of the Palo Alto, California-based company, which are up 10 percent since the start of the year, were barely changed in extended trading.
Money-losing Tesla's long-term viability depends on annually selling billions of dollars of Model 3s, the new sedan that starts at $35,000, about half the price of its flagship Model S. Tesla said that net reservations for the new model were stable during the fourth quarter.
Production delays blamed on battery issues resulted in only 1,550 deliveries in the fourth quarter, far below the 4,100 vehicles expected by analysts - meaning revenue from the highly anticipated vehicle has yet to hit Tesla's bottom line.
But obstacles to the production of 5,000 vehicles by the end of the second quarter "were getting smaller with every week," Musk told analysts on a conference call. Once at that production rate, Tesla could begin to generate sustained positive operating income "at some point in 2018," he said.
"I'm cautiously optimistic that we will actually be GAAP profitable with no asterisk," Elon Musk added. Using that accounting method, Tesla lost nearly $2 billion last year.
Tesla posted its biggest-ever quarterly loss, but the loss was not as wide as analysts were expecting, and revenue just topped targets.