Published: Thu, August 02, 2018
Money | By Hannah Jacobs

Tesla shares jump after cash burn worries abate, Musk apologizes to Street

Tesla shares jump after cash burn worries abate, Musk apologizes to Street

In the previous quarter, Musk called questions posed by two analysts "boring" and "boneheaded", and refused to answer them. The company probably will use "essentially a loan from the local banks" in China to fund a new factory it's building in Shanghai, he said on the call.

But on Wednesday, a contrite Mr Musk apologised to both and said he was exhausted from working more than 110 hours per week last quarter.

Musk also tweeted that developer applications must show prior work and that he's looking for games with "max playability & creativity". But analysts suggest that Tesla might run out of cash if it doesn't do a bigger capital raise.

But the company has a track record of missing its goals, and there remain big questions around Tesla's ability to scale production and compete with electric cars from other auto manufacturers.

"We aim to increase production to 10,000 Model 3s per week as fast as we can".

For nearly a year, Tesla followers fixated on the company's target to make 5,000 Model 3s in a week.

"After three quarters where investors have been in the dark with respect to estimating Model 3 volumes and margins, Q2 felt like there might finally be some light at the end of the tunnel", Evercore analysts wrote. The Model 3 was originally hailed as affordable at $35,000, but Tesla is only selling higher-end versions of the vehicle at the moment. Adjusted for stock-based compensation, the company lost $US3.06 per share.

Excluding items, Tesla reported a loss of $2.45 per share, compared with expectations of a loss of $2.92.

The company said it has cut back on capital spending by changing its strategy to produce the Model 3 on existing assembly lines, one in a giant tent, rather than adding all-new lines.

Tesla ended June with about $2.2 billion in cash, the least it's carried since the first quarter of 2016. That's substantially less than the 2017 level of $US3.4 billion.

Tesla's upcoming Version 9 software is expected to include several key improvements to the company's Autopilot driver-assist system. The CEO carried out a reorganization last quarter and announced that 9 per cent of the company's workforce would be dismissed. The company has never turned an annual profit and has had only two profitable quarters since becoming public in 2010.

On Twitter, Elon Musk asked for developers to consider joining Tesla to make games optimized for its vehicles.

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