Markets

Tesla burns $US740m in cash on way to loss

Tesla burns $US740m in cash on way to loss

Analysts have questioned whether the 5,000 rate would be sustainable.

Musk, Tesla's chief executive officer, is under intense pressure to prove he can deliver consistent production numbers for the new sedan, which has faced a host of manufacturing challenges since previous year. Bannon was referring to Andre Karpathy, Tesla's head of AI, who joined previous year from OpenAI and previously worked as an intern at Alphabet (GOOGL)'s DeepMind unit. But Tesla's cash burn in the second quarter slowed from about $1.1 billion. In the a year ago, Tesla has come under scrutiny for its factory conditions, vehicle production, treatment of employees, odd cost cutting measures, and CEO Elon Musk's fitful interactions with critics.

The company said it has cut back on capital spending by changing its strategy to produce the Model 3 on existing assembly lines, one in a giant tent, rather than adding all-new lines.

The company said it maintained its level of production, producing 5,000 Model 3s in a week multiple times in July. But with low cash reserves, investors have anxious that Tesla would need to borrow more money to keep the company afloat.

Investors have been eager to see Tesla's latest financial results, with the automaker under growing pressure to meet production and profitability targets.

The company's cash reserves have dropped to $2.2 billion, down from $3.3 billion at the end of past year. "We expect to generate positive cash including operating cash flows and capital expenditures", Tesla said in a statement.

During the second quarter, Tesla laid off 9 percent of its workforce as it worked toward Musk's promise of making money. Tesla said its capital expenses would be slightly below $2.5 billion in 2018, less than last year's $3.4 billion.

Tesla shares rose 5% in after hours trading despite the $717.5m loss, as the company forecast additional increases to its production capacity and profitability in the second half of the year. Tesla blames production difficulties in this area on hundreds of robotic lifters that bring components to the line to be attached to the painted metal body. As of April, some 23% of reservation deposits for the Model 3 were refunded, according to Second Measure. It plans to tap the debt market in China to fund a new factory in Shanghai, the company's first outside of the U.S. While these two cars didn't raise their average selling prices, Tesla found ways to reduce material and manufacturing costs. Tesla shares fell after the incident, and Musk later apologized.