That’s how the old saying goes and it’s true in nearly every industry. In order to offer a product to the world that will be followed, purchased and talked about in a variety of ways you need to spend some money in order to rebuild the capital spent and eventually turn a profit.
This thought process has been part of Tesla’s logic from the beginning. Starting with the Roadster that was used to finance the Model S which was used to finance the Model X and now both are financing the upcoming Model 3. This along with the stock offerings and increased support from shareholders has Tesla in a position to make these transitions regardless of the overall numbers.
The revenue Tesla brought in last quarter was $1.3 billion but that shows up as a net loss of $293 million. Where is this money going? Back into production, which is right where Elon Musk wants it to be at least until the company grows to be more self-sustaining. Tesla has been busy with many different creative projects including the two models they already build and the one that’s about to be in production as early as next year.
In the second quarter Tesla made more improvements to the Model S to make it look more like the Model 3 that was displayed, they introduced a 60-kWh Model S that’s upgradeable and continue to address concerns for the Model X. Along with these changes to their current lineup they were able to finalize the design of the production version of the Model 3 and somehow increase production by nearly 18 percent over the course of the quarter. Not only did they increase production by this amount, nearly halve of the production from this quarter was built in the final four weeks of the quarter.
The overall number of vehicles produced in the second quarter was 14,402 which were made up of 9,764 Model S and 4,638 Model X vehicles. This is lower than what Tesla had originally planned and a far cry from the 125,000 per quarter that will be needed to be at 500,000 a year which is the goal set with a deadline of the end of 2018 to be able to produce. Because so many of these vehicles were built in the last four weeks of the quarter Tesla is confident they can achieve their production marks.
Their plan is to increase their number to 2,200 per week in the third quarter and to 2,400 per week in the fourth quarter of this year. This should bring them to at least 50,000 newly produced Tesla models by the end of the year, which will then have to be increased significantly.
Is it possible for Tesla to reach their 500,000 mark by the end of 2018? That’s still up in the air as the company still is a long ways away from even coming close to this production mark, but possibly when they begin to churn out the Model 3 the production will increase significantly.
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