Ducking analysts’ questions has a price: $2 billion. Tesla Inc investors gave a rare rebuke to iconoclastic Chief Executive Elon Musk after he cut off analysts asking about profit potential, sending shares down 5 per cent despite promises that production of the troubled Model 3 electric car was on track. Tesla’s future depends on the Model 3 and the company said that it had largely overcome production bottlenecks, with Musk vowing a dramatic turnaround that would reverse losses and generate positive cash flow in just a few months.
Musk plans to shut down its Fremont, California factory for 10 days in the second quarter but said Tesla will meet the production target of 5,000 Model 3s per week by the end of June, as planned, and will turn a profit in the second half of the year.
To achieve profitability, Musk will have to reverse what today amounts to a $22,584 pre-tax loss per vehicle built by the Silicon Valley company. Tesla posted its biggest-ever quarterly loss when it announced first-quarter results last week.
Tesla stock was little changed after the earnings announcement but fell during a conference call, when Musk began cutting analysts’ questions short, costing Tesla over $2 billion in market capitalization.
“These questions are so dry. They’re killing me,” Musk said after an analyst asked what percentage of Tesla 3 reservation holders have started to configure options for their cars, an indicator of how much profit Tesla will be able to wring from the vehicles. Another analyst asked about a capital requirement before being cut off.
He then took several questions in a row about plans for a self-driving car network and other long-term projects from the host of a YouTube channel focused on investing, praising the questions as not boring.
Musk’s ability to run Tesla is crucial as the company strives to efficiently and profitably build its first vehicle intended to be produced at high volume, the Model 3.
Musk acknowledged error recently in over-automating the Model 3 assembly-line, which has resulted in production delays, but it is still unclear how long and costly it will be to unwind this mistake.
Delayed Model 3 production also comes as a slew of competitors bring new electric vehicle models to market.
The company stood by a previously announced target of building 5,000 Model 3s per week by the end of June. — Reuters
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