Tesla has had both the best and worst quarter in its history after it revealed it had burned through a record $745.3m in cash.
The electric car company has struggled to reach profitability since its launch due to huge R&D costs and production hurdles.
This was then compounded when its founder Elon Musk conducted a bizarre earnings call with investors where he lambasted some analysts for their “boring, bonehead questions.”
Unsurprisingly, Wall Street took that about as well as you would expect and the company’s shares dropped 5% during the call.
Yet despite Musk’s sometimes curt handling of the phone call he remained positive that 2018 would finally be the year that Tesla makes a profit.
“It’s high time we became profitable.” said Musk. “The truth is you’re not a real company until you are, frankly. That’s our focus right now.”
One of the ways Musk plans to do this is through massively automating much of the factory line that produces Tesla’s cars. Robots already play a considerable role in the process but Musk is betting heavily on them finally allowing the company to produce the magic number of cars (5,000) per month in order for it to be profitable.
If any company can be described as a victim of its own success, it’s Tesla. Ever since the company’s first ‘affordable’ Model 3 rolled off the production line last year the company has been struggling to produce the car quick enough.
Some 400,000 people pre-ordered the Model 3 when it was first announced last June and considering Tesla only managed to produce 2,270 Model 3s last month, you don’t need a degree in maths to understand the mountain that it has yet to climb.
Professor Christian Stadler, of Warwick Business School believes that even if Tesla can overcome its production issues, the clock is now well and truly ticking for the electric car company.
“If Tesla carries on the way it is going it will not survive, I think investors are right to be worried.” explains Professor Stadler.
“On the one hand I think Tesla would have broken down long ago if it wasn’t for Elon Musk driving this great excitement around the brand. He is prepared to take on great risk, and he has already had a near corporate death in 2008 so he is used to this sort of panic about finances.
“But investors are getting more and more worried, the hype is starting to wear off for them and Tesla needs to find solutions quickly.”