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Tesla will produce its new Model 3 Sedan at profit, Musk under pressure

Aug 2, 2018, 7:00 am

Tesla stated that it is to produce its anticipated new Model 3 sedan at a profit. It took several weeks for the company to stabilize preliminary output. But still, it faces possibilities of financial loss during the second half of the year.

The model is aimed to be of lowest price from Tesla, and plans are to hold it as a key to make itself a mass-market automaker. It has already gone through a few manufacturing challenges that drew way more expenses than expected. This keeps CEO Musk under pressure in delivering consistent production numbers for the sedan lineup.

After the firm’s $718 million loss from the second quarter, investors took its shares to 11% up in after-hours trading. The idea was to steady production volumes while reducing cash burn-in process, which worked out pretty well.

Tesla had to cut its capital spending plans in the process as well. It said that it will pursue its long-term production rate of 10,000 Tesla Model 3 sedan per week in next year via production ramp increment for solidifying finance.

We like the more muted tone of the company’s outlook, with the absence of unnecessary new stretch goals. Perhaps it reflects a more cautious Elon Musk. – CFRA analyst Efraim Levy

Yesterday, Musk apologized multiple times for refusing to answer ‘boring’ questions of analysts.

At present, Tesla is working on building the fleet of 55,000 Model 3s within the third quarter. This will lead it to gain about 15% of gross margin, which will further go up to about 20% in the fourth quarter. The total of 55,000 sedans has an average weekly rate of 4,230 units, according to the company.

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