Tesla has proven itself to be a wild card within an industry of long-standing automotive icons, producing attractive, desirable models without the traditional pain points of dealer networks and awful marketing.
Unfortunately, good products aren’t enough to ride to ultimate success, as the latest data from Reuters points out. While the EV automaker had a record sales quarter, delivering 11,532 vehicles to customers, it went through $359 million in the process.
Though Tesla’s costly ramp up to production of its upcoming Model X crossover is partly to blame for the rapid burn of cash, the brand’s made-to-order sales model lacks the production efficiencies of mass distribution enterprises and therefore is a costly operation.
CEO Elon Musk has given himself a deadline of the first quarter, 2016 to make enough money for mass-producing multiple models while expanding the business of manufacturing electric power storage systems, but that’s no easy task.
As of June 30, 2015, Tesla had $1.15 billion on hand, down from $2.67 billion a year prior. This past quarter, Tesla reported an operating loss of $47 million, which translates to over $4,000 in losses for each Model S sold.
While the situation sounds dire, a large chunk of its expenses this year ($1.5 billion) have been attributed to infrastructure for production of the Model X, and since its next vehicle, the Model 3, isn’t due until 2017, Tesla should have far lower cash burn this next year.
At this point, Musk is considering ways to raise more capital, including selling additional stock. Should Tesla hit its sales goal of 500,000 units per year by 2020, which will be dictated by the much more affordable Model 3’s success, the EV maker will be in a far more positive position, but nothing is guaranteed.