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Tesla Has Lost Almost $2 Billion in 2017

Tesla Has Lost Almost $2 Billion in 2017


When it was announced that Tesla was only able to create about 2,400 Model 3s in 2017’s fourth quarter, people already expected it to be as such. While CEO Elon Musk promised 20,000 Model 3s per month would be built from December onwards, he is known to make overly optimistic predictions. Aside from that, the Model 3 production was being held up by what was known as “manufacturing bottleneck issues” at the end of the third quarter. That took a toll to the company’s finances.


Tesla has revealed its Q4 earnings, and while income was at $3.29 billion, quarterly losses was at $675.4 million. Due to the fact the automaker has placed a lot of cash into building factories, maximizing production capabilities, and creating new vehicles, it usually posts a loss each quarter, but Q4 set a high record.


What’s interesting, however, is that Tesla significantly increased revenue from its zero-emission vehicle credits sale. In 2016’s fourth quarter, it sold ZEV credits amounting to $20 million, but after a year, fourth quarter credit sales went up to $179 million. Customer deposits have also noticeably gone up from $663 million to $858 million.


In a letter addressed to its investors, Tesla admitted “the slower than planned production ramp of Model 3,” offering new weekly production milestones of 2,500 Model 3s by Q1 2018’s end and 5,000 by Q2’s end. The same letter also emphasized that “while these are the levels we are focused on hitting and we have plans in place to achieve them, our prior experience on the Model 3 ramp has demonstrated the difficulty of accurately forecasting specific production rates at specific points in time.” Tesla then boldly pointed out that once it hits that 5,000-per-week milestone, it is thinking if expanding further, increasing Model 3 production to 10,000 on a weekly basis.


Tesla has also said, “2018 will be a transformative year for Tesla, with a high level of operational scaling. As we ramp production of both Model 3 and our energy products while keeping tight control of operating expenses, our quarterly operating income should turn sustainably positive at some point in 2018.”


Tesla’s goals for the new year sounds positive, but it’s still unclear what was causing the delays and how the company plans to address them. The letter to investors vowed the company was “taking many actions to systematically address bottlenecks and add capacity in places like the battery module line where we have experienced constraints,” but it didn’t touch into the topic of “bottlenecks” themselves.