Published: Sat, October 27, 2018
Money | By Hannah Jacobs

Updates to Tesla Model Y and ride-share plans

Updates to Tesla Model Y and ride-share plans

Six months ago, Tesla was struggling to produce 2,000 Model 3 sedans a week while Elon Musk slept on the factory floor. It's a combination of those models, Musk said, adding, "The advantage that Tesla will have is that we will have millions of cars in the field with full-autonomy capability, and no one else will have that".

Tesla has been trying to minimize spending and maximize revenue, cutting jobs and restructuring while trying to fast-track vehicle deliveries of its new Model 3 to customers, to meet a promise Musk first made in May to be cash-flow positive and profitable in the third and fourth quarters.

The Journal reported that former Tesla employees, who received subpoenas earlier in the investigation, have been contacted in recent weeks by the FBI for further testimony.

The latest information may be part of a larger inquiry that investigators began earlier this year, although neither the Justice Department nor the FBI have confirmed that they are investigating Tesla, which is common among federal agencies.

The company has cooperated in responding to what it called a "voluntary request" for documents from the Department of Justice in September, a Tesla spokesperson said.

Company shares hit a record in August but decreased again as Musk was sued by short-sellers and US regulators for tweeting, and then swiftly postponing, a plan to take the company private.

Musk has been saying since May that Tesla does not plan to raise equity or debt. In order to improve upon costs, Tesla offered customers a mid-size range version of the Model 3 which started at Dollars 46,000.

Tesla reported a Model 3 gross margin of 20 per cent, which significantly exceeded Mr Baird's expectations. It didn't hit the 5,000-a-week target until June 2018.

If a company's cash burn continues over an extended period of time, the company is operating on stockholder equity funds and borrowed capital.

"The results will boost Tesla's stock price, at least for a while, but investors will examine the results to see if they are sustainable or another rabbit Musk has pulled out of a hat using extreme measures that won't work as the company tries to grow", predicted Erik Gordon, a business professor at the University of MI. That ramp-up is now largely over, so Tesla is generating cash, not consuming it.

The Californian carmaker posted a net income of $312 million (£243.4 million) in the third quarter of this year, which is the firm's first GAAP (generally accepted accounting principles) profit in two years.

The company will likely average closer to the 7,000 Model 3 sedans a week that was the high-water mark last quarter.

Electric auto maker Tesla on Wednesday reported an "historic" quarterly profit driven by demand for its mass market Model 3, as the company looks beyond its United States home base to Europe and China.

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