Tesla has rounded out what founder and CEO Elon Musk described this week as a “phenomenal year” with a slightly slower cash burn rate, and on slightly more forgiving level of “production hell”, according to the company’s latest results letter and analyst briefing.
The company released its Q4 2017 result on Wednesday night in the US, reporting negative free cash flow of $276.8 million – the lowest in more than a year – and $675 million in losses attributable to shareholders; notching up almost $2 billion in losses for the whole year.
And it’s not about to ease up on the spending. The company told analysts in a briefing call that it is set to make some capital investments towards the end of the year towards the next EV in the series, the Model Y. (That will make the range from Model S, 3, X and Y).
Tesla also expects to meet its 2020 target of 1 million cars a year, Musk said on Wednesday, which as Business Insider has noted, will require a giant manufacturing leap, considering the company made just over 100,000 vehicles in 2017.
That said, Tesla made $3.3 billion in revenue, largely thanks to the Model 3, while future customers spent tens of millions just to join the queues for the Tesla Semi and Roadster models that Musk showed in November.
As Ars Technica put it “unlike other doomed companies posting dire losses quarter after quarter, Tesla revenues have been sizable… For the year, the company reported almost $US12 billion in revenue. People want Tesla products, but Tesla can’t stop spending more money than it has.”
Speaking to analysts on Wednesday night, Musk said that 2017 had been “on balance, a phenomenal year,” with the launch of the company’s first mass production car, the Model 3; the unveiling of the Tesla Semi; and the installation of the world’s biggest lithium-ion battery right here in Australia.
But it was also a year of manufacturing setbacks that Musk said, last quarter, had put the Model 3 “deep in production hell.”
One quarter later, Musk says the company is “still a few levels deeper (in hell) than we’d like to be,” but was on track to deliver 2500 vehicles by the end of March, and 5,000 by the end of Q2.
Musk said the Model 3 production hell resulted from the company being a little bit overconfident, and a little too complacent about the company’s ability to make batteries.
“It’s ironic since battery modules should be the thing we are best at,” Musk told analysts. But he also said the company had learned many invaluable lessons from the troubles, and made major strides in efficiencies along the production lines.
“If we can send a Roadster to the asteroid belt, we can probably solve the Model 3 problem,” he said.
“The competitive strength of Tesla long term is not going to be the car(s), it’s going to be the factory, we’re going to productise the factory,” he said.
Other things Musk said:
– Tesla expects to send one of its EVs on an autonomous coast-to-coast road trip in the US in three to six months.
– The Tesla big battery installed in South Australia last year had been is “exceeding its performance targets significantly,” and as a result of this success had boosted orders for the company’s commercial scale energy storage systems.
– He is reasonably confident the company can reach positive cash flow probably in Q3, four or five months from now.