Tesla reported $671 million quarterly loss, its largest ever, or 76 percent of what it lost in all of 2016.
Automotive revenue during the quarter grew 10 percent to $2.36 billion, the company said after stock markets closed. The company burned through $1.4 billion in cash during the quarter as it continued to invest heavily in its plants. That’s compared with a cash burn of $1.16 billion during the second quarter.
Tesla also expected non-GAAP automotive gross margin to temporarily decline slightly in the fourth quarter to about 15 percent, before recovering in the first quarter of 2018.
After releasing third-quarter earnings in 2016, Musk told investors that Tesla would not need to raise more capital to launch the Model 3; however, the company received $1.2 billion from a share and convertible debt offering in March, and raised another $1.8 billion in a bond sale in August for Model 3 production. The company said it has a cash balance of $3.5 billion entering the fourth quarter. Tesla expects fourth-quarter capital expenditures to be about $1 billion, driven largely by payments on Model 3 production equipment, spending on Gigafactory 1, and Tesla’s further expansion of stores, service centers, delivery hubs and the Supercharger network.
During the third quarter, Tesla said it had record net orders and deliveries of its Model S and Model X. The company confirmed it delivered 25,915 Model S and Model X vehicles and 222 Model 3 vehicles during the quarter, for a total of 26,137 deliveries.
In a letter to shareholders, Tesla said it expects to achieve a production rate of 5,000 Model 3 cars per week late in the first quarter of 2018. Previously, the company had said it hoped to achieve that number by the end of this year.
Tesla said its production rate of the Model 3 is steadily increasing, but the high degree of automation on the Model 3 production line has proven challenging, said Tesla in the shareholder letter.
“We continue to make progress resolving early bottlenecks related to these issues, and there remain no fundamental problems with our supply chain or any of our production processes,” Tesla said in the letter.
In particular, the battery manufacturing process at Tesla’s Gigafactory 1 held Model 3 production back, Tesla said. Tesla had to take over part of the manufacturing process from suppliers and redesign the process, the company said. Tesla expects throughput to increase substantially in the near future.
Tesla said that Model S and Model X are on pace for about 100,000 deliveries in 2017, an increase of 30 percent compared to 2016. However Tesla plans to produce about 10 percent fewer cars of both models in the fourth quarter as more resources shift toward Model 3. Inventories of finished Model S and X cars are expected to decline as a result.
In Q3, the Palo Alto-based company delivered the 250,000th Tesla. This is a significant milestone as the Tesla fleet is now about 100 times larger than it was five years ago, just before the launch of Model S.
Meanwhile, Tesla said it will unveil its Tesla Semi on Nov. 16.