clock menu more-arrow no yes mobile

Filed under:

Tesla posted a record quarterly loss as it ramps up production for its first mass market vehicle

Tesla is seeing continued demand for its mass market car, with an average of 1,800 reservations for the Model 3 a day.

Tesla Model 3

Tesla is receiving an average of 1,800 Model 3 reservations a day but is still losing money as it prepares to deliver on its most ambitious plan to date: Selling electric vehicles to the masses.

That delivery rate will start off slowly but increase exponentially, as CEO Elon Musk has previously said.

But the company lost $336 million in the three months ending in June, according to its report, which represents a record quarterly loss. Still, the company beat revenue expectations, bringing in a total revenue of $2.79 billion in the period. Wall Street was looking for $2.55 billion in sales.

Those losses may continue to mount as Tesla ramps up production of the Model 3. That said, the company’s total revenue more than doubled year over year.

The company expects to produce a little over 1,500 Model 3 cars next quarter, reaching 5,000 cars a week by the end of the year. At some point in 2018, the company wrote in its earnings report, Tesla hopes to produce 10,000 cars a week.

This past quarter, Tesla produced a total of 25,708 Model S and X cars and delivered 22,026.

The company is about to embark on what Musk called “production hell” as it begins manufacturing its first ever mass market car, the Model 3. At last count, Tesla saw 455,000 net preorders for its most affordable battery-powered sedan.

The urgency to speed up production for the Model 3 is also causing concern among factory workers over safety. Workers are worried about the risks they’re already facing in the company’s factory — something that could be exacerbated with the pressures of producing the Model 3 — as well as being paid appropriately for their work.

Just a few days after Musk handed over the keys to the first Model 3s to their owners, a factory worker organization called A Fair Future at Tesla sent an open letter to the company’s board of directors complaining of the lack of transparency over the safety risks of the job.

The workers cited 2015 data from the Bureau of Labor Statistics and said Tesla’s injury rate in 2015 was higher than that of “sawmills and slaughter houses.”

The letter reads:

“The results of third party health and safety audits that have been conducted at the facility in the past three years should be readily available to workers and Board members, so that we may understand the risks that experts have identified and monitor progress toward improvement. If it is to be effective, frontline Tesla workers need to have access to, and a voice in, the company’s safety plan (known in California as the Injury and Illness Prevention Program), and the ability to review accurate data about the progress we are making toward those goals.”

These worker issues, as well as a lack of transparency into the raise and performance evaluation process, are important to remedy as Tesla faces increasing pressure to meet its ambitious goal of producing 5,000 cars a week by the end of 2017. At this rate, those who are reserving Model 3s today will likely not receive their cars until the end of 2018, Musk said.

The company — which popularized the EV movement — has previously struggled to meet deadlines even as a luxury car maker and has only had two profitable quarters in its history as a public company. The company missed its goal to deliver 80,000 to 90,000 cars in 2016.

The company has also seen a number of good quarters, particularly when it briefly became America’s most valuable automaker after delivering a record 25,000 cars in the first quarter of 2017.

Still, there’s a big difference between 25,000 luxury cars and 400,000 mass market ones.

There’s also the additional engineering, research and development costs that are going into developing fully autonomous software. The company says the cars being produced today are equipped with the hardware that will enable full self-driving capabilities. Once the software end of it is figured out — the difficulty of which cannot be overemphasized — Tesla will roll it out over the air to cars on the road.

“We wish we could do all of this faster and get everyone’s Model 3 to them right away,” the letter to investors reads. “As we move through that ramp, our rate of production will move only as fast as the least successful part of our entire supply chain and production process.”

This article originally appeared on