Tesla : A work in progress or a building under demolition?

No matter how much the company boasts, it does not make up for the cash burned.

Tesla : A work in progress or a building

Amidst a soft luxury car market Tesla says it is still growing sales of the Model X and Model S. The company has burned a lot of cash to get the Model 3 launched. No matter how much the company boasts, it does not make up for the cash burned.

On Wednesday, the car – maker issued its quarterly earnings report. It claimed deliveries of Model S and Model X, however it was a mere six percent of the goal set in May. Twenty two thousand and twenty six vehicles were delivered of the total forty seven thousand seventy seven in the first half of this year.

Second quarter deliveries were fifty three percent more as that of the same period last year. The company said, its production rose by 40 percent in the second quarter of 2016 which accounted for twenty five thousand seven hundred cars. In the most recent quarter the company reported a loss of three hundred and thirty six million USD.

To survive by the billions Tesla needed outside money in three out of four quarters. The orders for the Model 3 have been more than eighteen hundred a day since July 28, when the handover event took place in Fremont. The company said it will be producing only fifteen hundred Model 3’s in the third quarter. This number is expected to rise by ten thousand every month in 2018.

The preparation of the Model 3 accounted for an increase in expenditures of the recent quarter. Problems for Tesla have now started growing beyond the production line. There are issues with refunding the thousand dollar deposit apart from which customer support issues have also started to surface. Reports like these question the company’s ability to scale not just the operation of manufacturing but the supporting infrastructure too since Tesla will be running all the operations in – house.

1 COMMENT

  1. It is a remarkable feat for Tesla that has only been in business for 14 years to compete against car companies that have been in existence for over 100 years. They have designed their factory and vehicle to take advantage of current day technology minimizing labor and parts costs.
    Furthermore, like it or not, by eliminating the middle man and related expenses improves profitability and gives more control of their product to the company. It’s premature to expect Tesla to arrive at a break-even point so early in the life of their company and it goes with the territory to burn through a lot of money to ramp up production to achieve their goal.
    The Tucker Corporation only built 51 cars with a lot more trouble than Tesla, so if the troubles of Tesla that were mentioned in the article are all they have to contend with, then Tesla is doing pretty good to make it this far.
    Thanks for your side of the story, but remember, there are always at least two sides.

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