Tesla has released its first quarter 2016 earnings report, revealing the company took a big loss of $282 million during the first three months of the year. The report also revealed that the timeline for producing 500,000 cars a year has been moved forward two years to 2018. Musk originally said Tesla would achieve that capacity by 2020.
First quarter revenue was $1.1 billion, up 22 percent from the same period last year. That amount couldn’t counteract the costs the company faced in early 2016, which amount to a net loss of $282 million. Tesla remained positive in the report, however, due to the more than 325,000 deposits, at $1,000 each, it received for the Model 3. That allowed the company to pay off part of a $430 million credit line it took out during Q1.
It’s because of the strong interest in Model 3 that Tesla says it’s moving up its 500,000-cars-a-year production capacity to 2018. To help avoid a backlog and meet the 2017 delivery target, Tesla CEO Elon Musk said in a conference call that he wants to produce between 100,000 and 200,000 units next year. He also said the majority of the engineering on Model 3 is completed, and that the cars present at the launch on March 31 had production drivetrains. He continued by saying production tooling for Model 3 will be ready by April 2017, with validation taking place through July. From there, the Fremont factory should be ready to start production, though Musk says there will inevitably be delays. To combat the hang-ups that delayed the Model X, Musk says he wants Tesla to have the capability to produce any part of the car in house so that it’s not at the mercy of its suppliers. The 500,000-car production target of 2018 correlates to a similar ramp-up at the Gigafactory, which we recently had the opportunity to tour.
“Increasing production five fold over the next two years will be challenging and will likely require some additional capital, but this is our goal and we will be working hard to achieve it,” Tesla said in a release. That additional cost will “impact [Tesla’s] ability to be net cash flow positive for the year” as the company had previously projected, but “investing to meet [Model 3] demand is the best long-term decision.”
Tesla produced 15,010 vehicles in Q1 2016, including 12,851 Model S sedans and 2,659 Model X SUVs. The company says it expects to deliver 20,000 vehicles in Q2 as it resolves quality issues with Model X. The automaker announced that two senior production execs, vice president of production Greg Reichow and vice president of manufacturing Josh Ensign, will leave the company.
