Tesla says 'production hell' resolved after Q2 trouble

Tesla Factory

Tesla's stock was flat in after hours trading following the earnings release.

Tesla also warned investors that the company will continue to face increasing production costs as it gears up its infrastructure to significantly boost its annual production.

In last year's second quarter, the automaker reported losses of 48 cents per share on $1.2 billion in revenue. Adjusted for certain costs, the electric vehicle maker said it earned $1.6 billion. This non-GAAP loss per share was wider than its $0.57 loss in the prior quarter and its $0.48 loss in the year-ago quarter.

"The most critical numbers in Tesla's Q2 report, revenue and profit, came in worse than expected, though that will have minimal impact on the stock's value", said Karl Brauer, a senior analyst for Kelley Blue Book.

Tesla raised $1.7 billion in an offering in May.

Tesla Motors recently disclosed $1.1 billion in third-quarter cash needs in their filing. Analysts polled by Thomson Reuters estimated a loss of 95 cents per share, or 52 cents per share excluding expenses.

As already reported, Tesla missed its guide for deliveries, but management said almost half of the production during the quarter was during the last four weeks. The company now expects to make 500,000 vehicles by 2018, not 2020 as originally planned. CFO Jason Wheeler also suggests build quality has improved 'quite dramatically, ' especially for the Model X. "As we move ever closer to the launch of Model 3, we remain as excited as ever for the future of Tesla".

While much of the production will go toward batteries for vehicles, Tesla has also said it expects rising demand for home and commercial storage battery systems.

The 13th straight quarterly loss for the Silicon Valley electric carmaker underscores the financial hurdles that hamper it while it takes on increasingly ambitious goals - a ten-fold ramp of vehicle production in three years and the recent plan to acquire solar panel installer SolarCity Corp. "Later this year, we plan to begin construction of new Model 3 body and general assembly centers". Tesla touted a reduction in labor hours per auto, supplier discounts, more efficient factories, and quarterly capital expenditures falling about half of last year's $400M. As part of this plan the American electric auto manufacturer will be bringing in the Model Y. This compact SUV will be based on the same chassis as the Model 3 luxury sedan that the company revealed in April.