Tesla pops 4% on results, production outlook – CNBC

6 months ago Comments Off on Tesla pops 4% on results, production outlook – CNBC

In the company’s post-results call, CEO Elon Musk said he expects production of 100,000 to 200,000 Model 3 vehicles in the second half of next year.

But it remains to be seen if Tesla can pay for and complete its bullish production projections for the coming years. In its letter, Tesla said increasing production “will be challenging and will likely require some additional capital.”

Stifel analyst James Albertine told CNBC’s “Closing Bell” on Wednesday that Tesla has yet to resolve the “execution risk” presented by boosting production.

The plans were further complicated earlier Wednesday as Tesla confirmed Greg Reichow, its vice president of production, will take a leave of absence after it finds a successor. Tesla’s vice president of manufacturing, Josh Ensign, is also expected to depart.

It fuels more questions around Tesla as it ramps up production for its flagship Model S, Model X sport utility vehicle and the Model 3. Musk seemed confident about Tesla’s manufacturing capabilities despite the personnel losses.

In the call, Musk touted Tesla’s “excellent production team.” He said the company’s Gigafactory allows it to “exceed anybody else in the world at scale economies.”

But Vilas Capital’s John Thompson, who is short Tesla, told CNBC’s “Closing Bell” on Wednesday it will “cost a tremendous amount of money to build plant capacity” to meet those production goals.

For the first quarter, Tesla reported operating expenses of $417 million, versus estimates of about $434 million, according to StreetAccount. The metric fell 3 percent from the previous quarter.

Its non-GAAP gross margin came in at 21.7 percent in the quarter, beating expectations for 20.6 percent.

Tesla added it is on track to make the first battery cells at its Gigafactory in the fourth quarter and is “adjusting (its) plans there to accommodate (its) revised build plan.”

Tesla pops 4% on results, production outlook – CNBC