Tesla continues burning through cash, but sticks to production goals

By Stephen Edelstein Published February 9, 2018

Despite the successful launch of SpaceX’s Falcon Heavy rocket, not all is well in the land of Elon Musk. Tesla reported its fourth-quarter and full-year 2017 financial results on Wednesday, February 7, and they included the largest quarterly loss in the company’s history. But Tesla claims it can meet its previously stated production targets for 2018.

Tesla did post record revenue ($3.3 billion), buoyed by customer deposits for its new semi truck and Roadster sports car. But the automaker still lost $771 million in the fourth quarter. Tesla also reported a negative free cash flow of $276.7 million, and a net loss of $2.24 billion for 2017. In 2016, Tesla reported a $773 million net loss.

Recommended Videos

This additional quarterly loss underscores the need for Tesla to ramp up production of the Model 3. Tesla delivered just 1,550 of them in 2017, owing to production bottlenecks. Musk has said that he wants Tesla to build 500,000 cars a year beginning this year, and the more affordable Model 3 is expected to make up the bulk of that output.

Tesla said it is on track to meet a previously stated goal of building 5,000 cars per week by the end of the second quarter. That milestone has already been pushed back twice. Tesla said in July 2017 that it would be making 5,000 cars a week by the end of that year, then said it would hit that target by the end of the first quarter of 2018. In January, Tesla quoted second-quarter 2018 as the new goal, and it’s still sticking to that.

Tesla spent $787 million on capital expenditures in the fourth quarter, which was below its projections, but said spending would be “slightly more” this year, according to Reuters. The automaker anticipates expenditures to expand production capacity at its Fremont, California, assembly plant, and Reno, Nevada “Gigafactory” battery plant, as well as for development work on the semi truck, the Model Y SUV, and a factory in China.

Thanks to robust Model S and Model X demand, Tesla delivered 103,122 cars in 2017. That’s a significant increase over the roughly 76,000 cars it delivered in 2016, and marks the first time Tesla has delivered more than 100,000 cars in a year. But the full-year financial results show that 2017 was a mixed bag for the world’s most talked-about automaker.

Stephen Edelstein

Contributing Editor

Stephen is a freelance automotive journalist covering all things cars. He likes anything with four wheels, from classic cars…

Topics

Cars

Here’s when Honda, Acura EV owners can start using Tesla Superchargers

2024 Honda Prologue Driving

The Tesla Supercharger network has already become widely popular with EV owners as other brands slowly adopt the popular "Tesla plug." Honda and its luxury sub-brand Acura will soon join the list of automakers who electric vehicles can be charged at one of the 20,000+ Tesla Superchargers across North America.

Starting June this year, those who own a Honda Prologue or an Acura ZDX will be able to stop by at a Tesla Supercharger station and refuel their car batteries. Since those EVs use a CCS1 charging connector, Honda said owners of Prologue and ZDX EVs will need to buy separate adapters to connect Tesla Superchargers that use a North American Charging Standard (NACS) connector.

Cars

Tesla’s Elon Musk reveals first city for automaker’s new robotaxi service

Tesla Model Y 2025.

Tesla is aiming to put its first robotaxis on public roads in June, the automaker’s CEO, Elon Musk, said on Wednesday.

Speaking during a call with investors following the release of Tesla’s latest financial results, Musk said the plan is to begin with a paid robotaxi service in Austin, Texas, in June, using vehicles with a version of Tesla’s Full Self-Driving (FSD) software. He added that a paid ridesharing service using unsupervised autonomous Teslas would expand to other U.S. cities “by the end of this year,” with launches in the first overseas markets coming some time in 2026, though he cautioned that regulatory constraints in locations like the EU and China could result in delays.

Cars

EV sales surge could continue as Trump delays ending federal rebates, report says

Second-Gen Rivian R1S on a road

A surge in sales of electric vehicles in the final months of last year could continue well into 2025, as consumers continue to take advantage of federal tax incentives while they last, according to a report by the Associated Press.
On the day of his inauguration, President Donald Trump signed an executive order titled “Unleashing American Energy”, which says the government is “considering the elimination of unfair subsidies and other ill-conceived government-imposed market distortions that favor EVs over other technologies.”
During his campaign, Trump’s team said it was planning to end the Biden administration’s $7,500 tax credit on the purchase or lease of an EV, although it did not provide a timeline for doing so.
Americans rushed to take advantage of the incentive, helping fuel a surge of more than 15% in EV sales in the fourth quarter, according to Cox Automotive.
Recent surveys show that incentives have played a major role in fueling EV sales over the past few years, and that a majority of Americans are in favor of government incentives to help with the purchase of an EV.
Meanwhile, the wording in Trump’s executive order, which says his administration is still 'considering' its options, leaves room for ambiguity about the timing of its application.
“Temporarily, sales of EVs could skyrocket as car-buyers rush to take advantage of existing tax credits,” the report by the Associated Press says.
In order to repeal the EV tax credit, the Trump administration will need to obtain the approval of congress. The process will likely take place as part of broader negotiations on extending Trump’s first-term tax cuts, which are due to expire near the end of 2025.
It’s also not entirely clear if the Trump administration will seek to end the whole of the $7,500 EV tax incentive. In order to obtain the incentive for the purchase of an EV, restrictions apply for high-income households and for EVs with non-U.S. made batteries. But those restrictions don’t apply to leasing an EV.
According to Cox Automotive, members of the Trump administration are particularly keen on ending “this leasing loophole, which was created partly to appease Korean and Japanese automakers, who have invested billions in U.S. EV manufacturing.”
Ending rebates and other subsidies for EVs is also likely to meet challenges, be they legal or political, from different actors.
The Zero Emission Transportation Association (ZETA), a trade group whose members include the likes of Tesla, Waymo, Rivian, and Uber, has come out in support of incentives for both the production and the sale of EVs.
ZETA says the incentives for both EV and battery-makers have led to enormous investments and job gains in Republican-dominated states like Ohio, Kentucky, Michigan, and Georgia.