Tesla announced its earnings for the first time since it embarked on what CEO Elon Musk called “production hell.” The company said it missed its goal of producing 1,500 of its first mass market vehicles by September because of battery manufacturing issues.
Tesla posted a record quarterly loss of $619 million as it struggles with Model 3 production
The company said it would produce 1,500 Model 3s in the third quarter but only produced 260.
The company almost doubled its losses in the three months ending Sept. 30 to $619 million, a record quarterly loss for the electric vehicle manufacturer. The company missed profit expectations, reporting a loss of $2.92 a share on adjusted earnings, compared with Wall Street’s expectations of $2.30. Tesla posted sales of $2.98 billion, beating the expected $2.94 billion.
The company now says it expects to produce 5,000 of its mass market vehicles, the Model 3, per week by the end of the first quarter of 2018. Originally, Musk said the company planned to meet that goal by the end of 2017.
It expects to produce 10 percent fewer Model S and Model X cars — its sport and luxury lines — in the current quarter than it did in the third quarter in order to meet demand for the Model 3.
As the company announced in October, Tesla only produced 260 Model 3 vehicles in the third quarter of this year. The electric vehicle manufacturer attributed the production delays to “bottlenecks” and denied that there were any fundamental issues with the Model 3 supply chain.
The current production rate is a far cry from CEO Elon Musk’s original goal of producing 5,000 cars a week by the end of 2017.
“While we continue to make significant progress each week in fixing Model 3 bottlenecks, the nature of manufacturing challenges during a ramp such as this makes it difficult to predict exactly how long it will take for all bottlenecks to be cleared or when new ones will appear,” Musk’s letter to the shareholders read.
Meeting that goal in the last quarter of this year will require a steep production ramp that the company has yet to accomplish since the beginning of Model 3 production.
Adding to the company’s production difficulties this quarter, Tesla recently fired hundreds of employees including some engineers and factory workers, as the Mercury News first reported, as a result of poor performance evaluations, according to the company.
The Model 3 is the company’s first attempt at producing and delivering a mass market electric vehicle, a crucial part of Musk’s master plan to save the environment. The starting price for the Model 3 is $35,000, putting it in reach of a bigger portion of the market than the luxury vehicles that currently characterize the Tesla brand.
For all of its struggles with Model 3 production, Tesla delivered a new quarterly high of 26,137 cars. As of October, the company expected to far exceed the original goal of delivering a little more than 47,000 cars in the second half of the year. Tesla expects to deliver a total of 100,000 cars in 2017.
The automaker, known for its luxury electric vehicles, has delivered more than 250,000 cars since its inception in 2003.
This article originally appeared on Recode.net.
