Q2 loss as Tesla Model X ramps up

TESLA’S vertical ascension continues apace, beating its own quarter-two production targets, but the US car maker has posted a loss for the second quarter of the year, while revising its production target downwards.

In a shareholder newsletter released this week, the company reported that it built 12,807 Model S sedans in the second quarter, against a projected output of 12,500.

The Californian company lost US$184.2m (A$249.8m) in the second quarter of 2015, compared with a loss of US$61.9m (A$83.9m) in the same period in 2014.

Revenues climbed 24 per cent to US$955m (A$1294.9m) from US$769.3m (A$1043.3m), as car sales continued to rise.

Capital expenditure on its new battery ‘Gigafactory’ in Nevada that is set to open in 2016, as well as tooling up for the new Model X SUV, exceeded US$400 million.

The company has also reduced its production forecast for the Model S to “between 50,000 and 55,000 units”, down from a 2014 prediction of 60,000, indicating that the focus on Model X production may further slow Model S.

Tesla chairman and CEO Elon Musk indicated in a teleconference with shareholders that the gull-wing Model X is expected to launch in the third quarter of 2015, but it “might be the hardest car in the world to build”.

“Since production ramps rapidly late in Q4, a one-week push out of this ramp due to an issue at even a single supplier could reduce Model X production by approximately 800 units for the quarter,” the company said in a statement.

“Furthermore, since Model S and Model X are produced on the same general assembly line, Model X production challenges could slow Model S production.”

The Powerwall battery was due to begin deliveries in the US summer, but Tesla says that production will start “this quarter”, with an increase in production due by year’s end. The product is said to be sold out through to the end of 2016.

The company emphasised that it would not compromise the quality of its products in a bid to reduce lead-times.

“Simply put, in a choice between a great product or hitting quarterly numbers, we will take the former. To build long-term value, our first priority always has been, and still is, to deliver great cars,” it said.

The company has forecast that 50,000 cars will be built this year, rising to 500,000 by 2020.