Tesla CEO Elon Musk Promises ‘Sustainable Profitability’ Despite Q2 Loss
Tesla shares surged on Thursday, as its chief executive, Elon Musk, appeared to restore investor confidence with an apologetic and restrained performance on the company’s post-earnings conference call.
According to a new report from CNBC, shares of Tesla soared nearly 10 percent Thursday morning, a day after CEO Elon Musk and the automaker promised a profitable second half of 2018 during its second-quarter earnings report. Investors focused on steadier production volumes and a slower rate of cash burn, putting Tesla on track to retake the title of most valuable U.S. automaker from General Motors.
The electric-auto maker reported another big loss in this year’s second quarter on Wednesday — $742.7 million. While it marked an improvement from the record $784.6 million that Tesla lost during the first quarter, it still represented a sobering 85 percent jump from the Palo Alto company’s loss during the same period last year.
But after nearly a year of struggling to ramp up production of the company’s latest car, the Model 3, Tesla insisted Wednesday that the output of its Fremont factory had finally reached a level that would make the upstart automaker “sustainably profitable” for the first time.
“It took 15 years to execute on our initial goal to produce an affordable, long-range electric vehicle that can also be highly profitable,” reads the letter signed by Tesla CEO Elon Musk and Chief Financial officer Deepak Ahuja. “In the second half of 2018, we expect, for the first time in our history, to become both sustainably profitable and cash-flow positive.” Outside of a recession or major economic shock, the company is confident that it can reach that target, he said.
During the quarterly earnings call, Musk stated that he believes the company will be manufacturing around 5,000 Model 3s and 2,000 Model S examples per week in the third quarter. In perspective, Tesla was only producing 2,000 vehicles per week at this time in 2017. Tesla still looks to manufacture 10,000 Model 3s per week in the future.