Tesla\u2019s Elon Musk keeps getting the green light to do what it takes to bring electric cars to the masses, regardless of how much it\u2019s going to cost.<\/p>\n
The company burned through $1.16 billion in cash during the second quarter by spending on capacity for its cheapest model yet and boosting battery output.<\/p>\n
Investors fixated instead on what Musk said is coming next: Hundreds of thousands of Model 3 sedan deliveries, installations of solar roofs and an all-new semi truck to add to the lineup.<\/p>\n
\u201cThis is the best I\u2019ve ever felt about Tesla\u2019s future,\u201d Musk said on a conference call with analysts.<\/p>\n
The company\u2019s stock rose 7.4% to $350.13 after the close of regular trading.<\/p>\n
The chief executive officer has built a fanatical following of Tesla shareholders who continue to throw their support behind his clean-energy vision.<\/p>\n
It helps that consumers keep opening their wallets: The Model 3, which starts at $35,000, has racked up nearly half a million reservations and is drawing more deposits by the day.<\/p>\n
\u201cAs long as they can continue executing on the growth trajectory, they won\u2019t have trouble raising additional capital,\u201d Joe Dennison, associate portfolio manager of Zevenbergen Capital Investments in Seattle, said in an interview Wednesday. \u201cIt\u2019s all about the Model 3 now.\u201d<\/p>\n
The record negative free cash flow Tesla reported for the three months ended in June was almost double the $622 million it went through in the first quarter.<\/p>\n
With a little more than $3 billion in cash on hand, Musk told analysts the company is thinking about raising money through a debt offering.<\/p>\n
\u201cHe\u2019s going to need capital,\u201d said Ross Gerber, chief executive officer of Gerber Kawasaki Wealth & Investment Management, which holds Tesla shares.<\/p>\n
\u201cThat\u2019s the one part of the financials that are a little bit troubling. To underestimate the cash burn over the next six months will be a mistake.\u201d<\/p>\n
Tesla has had little trouble drawing investor interest in funding Musk\u2019s ambitions, with optimism about the Model 3\u2019s prospects contributing to a 53% jump in its stock price this year.<\/p>\n
Musk handed over the first 30 Model 3 sedans to employees on Friday. Tesla\u2019s goal is to build 100 of the cars in August and more than 1,500 by September, then ramp up to a targeted rate of 20,000 a month by the end of the year.<\/p>\n
\u2018Production hell\u2019<\/strong><\/p>\n The company has about 455,000 net reservations for the car, according to Musk. He said he misspoke when telling reporters Friday that the count was at more than half a million.<\/p>\n The CEO described plans to quickly ramp up output of the Model 3 as \u201cproduction hell\u201d for workers at Tesla\u2019s lone car assembly plant in Fremont, California.<\/p>\n \u201cThey should go back to the capital markets right now, when all the press on the vehicle is positive,\u201d said David Kudla, chief investment strategist at Mainstay Capital Management, which doesn\u2019t hold Tesla shares.<\/p>\n \u201cThey need to raise at least $1 billion. The production hell could be worse than Musk is letting on.\u201d<\/p>\n Since the handover event, Tesla said it\u2019s averaging more than 1,800 net Model 3 reservations per day. The company also sought to alleviate concerns that interest in the car could sap demand for the pricier vehicles in the lineup.<\/p>\n It expects to deliver more Model S and Model X vehicles in the second half than the 47,077 delivered in the first six months.<\/p>\n Semi, crossover<\/strong><\/p>\n With the the Model 3 now hitting the streets, Tesla plans to soon unveil an electric semi truck. The lineup will expand further with the Model Y, a smaller crossover Musk has said could arrive as soon as late 2019.<\/p>\n The CEO recanted a previous statement that the vehicle will be built using a new architecture, telling analysts the company will substantially carry over underpinnings used for the Model 3.<\/p>\n \u201cThat will really accelerate our ability to get to Model Y to market faster,\u201d Musk said. \u201cI\u2019d like to thank my executive team for stopping me from being a fool. I still think we want to do the crazy thing in the future, but we will punt that until after the compact SUV.\u201d<\/p>\n
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