The maverick electric-car and energy company led by billionaire tech industrialist Elon Musk unveiled its goals as part of earnings results released on Wednesday. Launching the Model 3, with a $35,000 base price, is critical given the company’s track record of delays for its vehicles, most notably the Model X SUV that came out 18 months after an initial target date.
“Our Model 3 program is on track to start limited vehicle production in July and to steadily ramp production to exceed 5,000 vehicles per week at some point in the fourth quarter and 10,000 vehicles per week at some point in 2018,” Musk and Jason Wheeler, Tesla’s chief financial officer, said in a letter to shareholders.
THE COMPANY HAS A WAITING LIST FOR ITS FIRST MODERATELY PRICED VEHICLE OF ABOUT 400,000 PEOPLE
“In early February, we began building Model 3 prototypes as part of our ongoing testing of the vehicle design and manufacturing processes,” Musk and Wheeler said. “Initial crash test results have been positive, and all Model 3-related sourcing is on plan to support the start of production in July.”
REVENUE JUMPED IN THE FOURTH QUARTER
Revenue jumped in the fourth quarter and for the full year, owing to the acquisition of solar power installer SolarCity, approved in November and completed in January. Baking in the new unit’s business, revenue grew to $2.28 billion for the quarter, up 88 percent from a year earlier, and to a best-ever $7 billion for the full year, compared with $4 billion in 2015.
The Palo Alto, California-based company in January estimated that it delivered 76,230 vehicles to customers in 2016, and produced about 84,000. Both figures were below its guidance.
Tesla’s net loss in the quarter narrowed to $219 million, or 78 cents a share. That was better than the $1.16 loss per share expected by Barclays analyst Brian Johnson. The company’s quarterly revenue also topped Johnson’s expectation of a $2.12 billion.
Still, given the “nearly superhero status of Elon Musk” for many investors, at this stage Tesla’s financials are less meaningful for many than its CEO’s vision for the future, Johnson said in a report before results were released.
“To the fervent Musk believer, the frequent sightings of Mr. Musk in Trump Tower and the White House only likely reinforced, along with now a successful rocket launch and landing, Mr. Musk’s standing as the potential successor to Steve Jobs,” he said.
Ahead of the arrival of the Model 3, Tesla is scrambling to improve production processes to handle as much as a 10-fold expansion in output over the next three years. To aid in that process, it bought Grohmann Engineering, a specialty German firm, late last year to automate more of its processes.
“Grohmann Engineering is a world leader in highly-automated methods of manufacturing, and this acquisition launches Tesla Advanced Automation Germany, which will help us innovate manufacturing processes to be used initially in Model 3 production,” Musk and Wheeler said in their letter.
The company has begun making battery packs at its $5 billion Gigafactory in Nevada, though the facility is far from complete. Even as it continues construction work there, it’s thinking ahead to additional such facilities, the company said.
“Installation of Model 3 manufacturing equipment is underway in Fremont and at Gigafactory 1, where in January, we began production of battery cells for energy storage products, which have the same form-factor as the cells that will be used in Model 3,” Musk and Wheeler said. “Later this year, we expect to finalize locations for Gigafactories 3, 4 and possibly 5,” they said, noting that Gigafactory 2 is the Tesla solar plant in Buffalo, New York, as part of the SolarCity purchase.
The company didn’t immediately lay out specific financial goals for 2017, beyond plans to make capital expenditures worth as much as $2.5 billion.