Tesla reports big loss as Model 3 production struggles continue

Tesla reports big loss as Model 3 production struggles continue

The company has previously projected that it would be producing 20,000 Model 3 cars a month by the end of the year, so it will be interesting to see whether the company sticks by that guidance when it releases its third quarter results after the bell on Wednesday.

Shares of Tesla are down 3.18% in AH trading to $310.65.

For weeks now, many have wondered whether Tesla had solved the production challenges hampering the rollout of the Model 3, the company's first mass-market vehicle.

The demand for the Model 3 is certainly there, so any delay in ramping up production is costing them money in cash flow terms.

"The Model 3 production process will be vastly more automated than the production process of Model S, Model X or nearly any other vehicle on the market today, and bringing this level of automation online is simply challenging in the early stages of the ramp", Tesla said.

Microsoft's Surface Pro with LTE launches in December
No words on how built-in LTE might impact battery life, estimated at up to 13.5 hours for regular Surface Pro SKUs. For example, the Surface engineering team has included 7 LTE antennas on top of the device for great connectivity.

Tesla said its primary production constraint has been at the battery module assembly line at its Gigafactory in Sparks, Nevada. The problems could also worry the over 500,000 customers who have put down a refundable deposit on the auto. Equities research analysts anticipate that Tesla will post ($6.70) EPS for the current year. In addition to redirecting some of Tesla's best engineering talent to the factory, Musk said he is personally attacking the problem alongside his employees.

The firm also delayed its production target for its new Model 3 auto. It also spent $325 million to repay a credit facility in the quarter.

Thousands of Model 3s were supposed to have been sold by now. Reports that many of those vehicle were returned to fix battery problems were not disputed by Tesla. The company had revenue of $2.79 billion during the quarter, compared to the consensus estimate of $2.50 billion. Still, there's evidence that Tesla is very far from that goal: The Wall Street Journal reported last month that Model 3's were being "banged out by hand". Excluding items, the company lost $2.92 per share. Tesla expects Model 3 non-GAAP gross margin to reach breakeven by end of Q4 as capacity utilization kicks in at higher volume.

Last month, Tesla reported it delivered 26,150 vehicles in the third quarter, a 4.5 percent rise on the same period of 2016.

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