Amid Model 3 Hoopla, Tesla's Losses Mount

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It's been an interesting week for electric vehicle manufacturing mammoth, Tesla (NASDAQ:TSLA), whose share price jumped almost 7 percent on Thursday (August 3), following the release of its Q2 results on Wednesday (August 2).

If the Model 3 becomes a hit, Tesla is going to change the concept that to buy a good electric auto you have to pay so much money. The shares rose $6.32, or 2 percent, in regular trading to close Wednesday at $325.89.

While Musk noted that total orders for the Model 3 - which is positioned as the company's most affordable vehicle yet with a starting price of $36,000 - dropped from 518,000 to 455,000, those cancellations were over the course of the year and so there's nothing to worry about.


The $US35,000 base-price Model 3 is Tesla's least expensive auto.

Musk said investors should have "zero concern" that Tesla would fail to reach its production target of 10,000 vehicles each week by the end of 2018. The same period from previous year reportedly had a net loss of $1.61 per share and $1.27 billion in revenue. It delivered just over 22,000 Model S and Model X vehicles for the quarter.

"With no advertising, paid endorsements or guerilla [sic] marketing campaigns, Model 3 net reservations have still steadily climbed every month, and have even accelerated further in recent weeks", the company said in its earnings release Wednesday.


Tesla forecast spending $2 billion in capital expenditures in the second half of the year, up from $1.5 billion in the first six months of the year.

Does the future Tesla (TSLA) really rest on the Model 3 - the company's first attempt at producing a mass market electric vehicle? Tesla has not given guidance for Model 3 sales in Q4, due to the number of variables associated with their S-curved production ramp of the vehicle.

Excluding items, the company lost $1.33 per share. On average, 19 analysts polled by Thomson Reuters expected loss of $1.80 per share for the quarter. "The combined Model S and Model X market share grew in the United States premium luxury vehicle market during Q2 2017", the company said in its statement.


"There are walls moving all around that can all impede the success of the Model 3", said Karl Brauer, the senior director of content and executive publisher for Cox Automotive.

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