Electric car manufacturer, Tesla, is facing some challenges introducing its first consumer level vehicle to the market. However Tesla CEO Elon Musk, reassured investors on Wednesday that his company was able to meet the increasing demand for the groundbreaking car.
Musk started by saying that the company may experience some fluctuations in the rate of production, but no one should be concerned about Tesla’s ability to increase production for the Model 3. These comments were made on a conference call after the company announced its earnings for the second quarter. Investors saw plenty of potential in Tesla’s prospects as the company’s shares were up 7 percent in extended trading despite the company’s widening loss as it put more money into factories to accommodate the new vehicle.
Tesla claims to have lost $401.4 million in the second quarter, which officially ended June 30th. This is compared to the $293.2 million the company lost in the second quarter of last year. On the other hand, the company reported strong growth in operations for both its automotive and solar divisions. Their total revenue for the quarter added up to $2.79 billion, which is double that of the $1.27 billion made in the second quarter of 2016.
The wider loss in the quarter does not scare Musk though, as he says Tesla is on track in many other areas including batteries, solar panels and sales of existing vehicles like the Model S and Model X sports utility vehicle. Musk added that the company was starting to eye China and Europe for battery production factories also stating that most production would remain in the United States.
Although Tesla posted growing sales for the Model S and the Model X, the company is facing many challenges as it makes its first attempt at selling to a mass market. The Model 3 comes with a starting price of $35,000 and is a big first step for the electric car market. Research, equipment and product development spending have long held Tesla back when it comes to profit margins, but Musk is confident in the profits from the relatively small number of Model S and Model X vehicles it’s sold.
Analysts also pointed out that although sales are rising the per car profit is not. As of now, it is nowhere near substantial enough to cover the amount Tesla puts into investments. Experts agree that the company’s best course of action right now is to produce a steady amount of Model 3s for delivery to the consumer later this year.
While industry analysts and investors may not have faith in Tesla’s ability to ramp up production, Elon Musk is very confident in the future of the company. This would not be the first time Tesla had to prove analysts and doubters wrong and it certainly won’t be the last, mainly because the auto industry has yet to see anything like them. Manufacturing Talk Radio has always kept a close eye on Tesla and we will continue to do so. Don’t hesitate to check back for more information on this fascinating company and other manufacturing industry developments.