The old saying that you have the “spend money to make money” is never truer than in the automotive industry. Tesla has continually reported losses each quarter, but that doesn’t seem to be stopping any investors or keep them away when they’re looking for the positive. This company is growing quickly and trying to ramp up to meet the goals set in the past. When the second quarter earnings call took place the report was the company may have spent more money than it made, but this spending was much less than expected.
Right now, the Model 3 versions that have been delivered were only a few to employees. All of these models are the 310-mile range versions with the more powerful battery. While these models are more expensive, the plan to create the lower range models won’t start until January. The models that will be delivered to non-employees of Tesla won’t begin until the fourth-quarter of this year either. Even though this is a model that will slowly come to the public, the demand for the Model 3 hasn’t dwindled as more reservations have been filed and now the number is at 455,000.
In addition to the growth and development of the Tesla company and the new release of the Model 3, there is more demand than ever for the Model S and the Model X. As the production increases for all three models in the second half of 2017, the expectation is that more models will be built this year than any other in the past. This is a companythat’s certainly on the rise and continues to report losses, but those losses have been anticipated from the beginning and more are expected as this company continues to expand its lineup.
There is a continued need to build-out the Fremont factory and thenew Gigafactory in Nevada. The Gigafactory is where the batteries for the Tesla lineup are being produced which will continue to cause the company to burn through the excess cash they have had on reserve for this purpose. The reality is, a company can operate at a loss as long as it has a plan for getting back to a positive form down the road and beginning to report profits rather than losses. To this point, Tesla has reinvested everything back into their production in order to ramp up and become a volume producer of EV models.
The goal is to have at least 10,000 vehicles offered per week out of this company by the end of 2018. This would put the brand above their goal of producing 500,000 models per year and would set the 2019 year as the one that can be the most impressive and effective for this brand. The Model 3 is here and with it comes the hope and the promise of a bright future for Tesla as the company looks to ramp up production and begin to litter the landscape with long range EV models.