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Electric car company Tesla has posted a staggering quarterly loss that amounts to nearly A$1 billion, reported news.
The US$780 million quarterly loss (A$997 million) is in the wake of the huge production problems that have slowed the flow of its blockbuster car to a trickle.
The quarterly loss gives Tesla an annual loss of US$2.2 billion and mounting debt.
Confessing the debt to the markets on Thursday morning Australian time, Tesla admitted it has been “overconfident” and “complacent”.
Production issues have caused Tesla to fall well behind schedule on its Model 3 car, which is intended to be a mass-market offering.
The company aimed to make 5000 cars a week by the end of 2017 but could only manage to deliver a few thousand in total during the year. It is now working to rectify its mistakes by importing new production equipment from Germany to replace the problematic equipment at its battery factory.
The problems can be traced back to a rapid set of timelines that saw Tesla rush to achieve high levels of production.
Musk admitted on Thursday he had been too ambitious in the past.
“We were probably a little overconfident, we were complacent,” he said, admitting that fixing all the mistakes had caused “a lot of pain”.
“Pain level is extremely high. I was in the gigafactory on Thanksgiving day,” he said.
Tesla’s delays put the company in an uncomfortable situation. The company borrowed a lot of money to build itself up, and it needs to sell lots of cars to pay the money back. Each delay costs more money while deferring the money-making phase. That can’t go on forever.
Tesla has US$9.5 billion worth of long-term debt and capital leases on its books, and an interest bill on its debt of nearly half a billon dollars a year. Even if it doesn’t borrow more, that bill could be set to rise as US interest rates go up.
On Thursday, however, Tesla CEO Musk was seeing the bright side. He willingly admitted his enormous automated battery factory — the “alien dreadnought” gigafactory — was failing to operate properly.
Two of four zones “flat out didn’t work”, he said. But he was finding solace in an unexpected place – by seeing that humans could actually operate better than robots.
“We have a semi-automatic line which is a series of small automated stations manned by people. And they have actually been remarkably effective,” he said. “It has renewed my faith in humanity.”
The man who wanted to banish most humans from the production facility altogether is instead finding them very useful and highly capable.
“The rapid evolution of progress and the ability of people to adapt rapidly is quite remarkable. Our semi-automatic line is exceeding all three of the automatic lines.”
Still, Mr Musk didn’t want to give the impression that the batteries were being made like custom furniture or wood-fired pizzas.
“It is not artisanal!” he joked.
Musk, who has been regularly blowing away competitors in the space industry with his company SpaceX, yesterday landed two rocket boosters back on earth after a launch of the Falcon Heavy rocket.
Aboard that rocket was Musk’s Tesla Roadster, the first car Tesla ever made.
Musk uses that as inspiration for overcoming the issues in making Tesla’s mass production car, the Model 3.
“If we can send a roadster to the asteroid belt we can probably solve Model 3 production. It’s just a matter of time,” Musk said.
Read more at news.com.au
show source http://www.news.com.au/finance/business/other-industries/tesla-lost-1-billion-in-3-months/news-story/12ab1b2c198c2b28605cc4fa9e30e513