Tesla said Wednesday that it was still on pace to turn a profit later this year, after a quarter in which it continued to burn through hundreds of millions of dollars in cash.
In the second quarter, which ended June 30, Tesla lost $743 million on sales of $4 billion. It lost $3.06 per share on an adjusted basis, excluding stock compensation — more than analysts had expected. The company’s cash balance fell to $2.2 billion, with the net decrease narrowing to $436 million, from $745 million in the first quarter.
Elon Musk, Tesla’s chief executive, has repeatedly forecast that Tesla will generate profits in the third and fourth quarters of this year, and the company said Wednesday that it still expected to achieve that goal. Tesla warned, though, of “negative pressures” from higher import duties on Chinese components — a consequence of President Trump’s trade battle with China.
On one of its most closely watched metrics — production of the mass-market Model 3 — the company reported gains. In late June, Tesla passed a key milestone, producing 5,000 of the vehicles in a week — the benchmark it has said it needs for sustainable profitability. In July, Tesla maintained that production pace “multiple times,” the company said Wednesday.
“A total vehicle output of 7,000 vehicles per week, or 350,000 per year, should enable Tesla to become sustainably profitable for the first time in our history,” the company said Wednesday in a note to investors.
Tesla’s stock rose nearly 5 percent in extended trading, after closing Wednesday at $300.84.
The company recently said that Model 3 production in the quarter surpassed the combined production of its higher-priced Model S luxury sedans and Model X sport-utility vehicles for the first time. Tesla once spoke of selling the base version of the Model 3 for $35,000, but it is currently taking orders only for versions that start at $49,000.
Tesla’s ambitions — its stated corporate mission is “to accelerate the world’s transition to sustainable energy” — are expensive, and its financial safety net is dwindling, prompting some analysts to predict that it will soon need to raise more money from investors. The company has never had a profitable year and has incurred $10 billion in debt.
In June, Tesla, which is based in Palo Alto, Calif., laid off 3,500 employees, around 9 percent of its work force, to reduce its operating costs. It recently made the unusual move of asking some suppliers for price reductions on work already underway.
The amount that Tesla owed its suppliers ballooned in the second quarter, which may have helped the company conserve its cash during the quarter. Its accounts payable, the balance sheet item for yet-to-be-paid bills, totaled $3 billion at the end of the second quarter, an increase of more than $425 million from the first quarter.
But its big bets keep growing. Last month, Tesla announced plans for a vast new plant in China, its first outside the United States, that it hopes will eventually make 500,000 vehicles a year.
Analysts will have a chance on Wednesday to quiz Tesla executives on a conference call. Last quarter’s call became heated, as Mr. Musk refused to answer what he called “boring, bone-headed questions” and suggested that those who do not believe in the company’s long-term vision should “please sell our stock and don’t buy it.”
Peter Eavis contributed to this report.
Orignially published in NYT.