2018.05.0220:47:00UTC+00Tesla Books Record Q1 Loss, Says Model 3 Production on Track

Tesla Inc. reported a narrower-than-projected loss as the electric carmaker increased spending to boost Model 3 production in April.

Despite beating estimates, the company posted its worst ever quarterly loss and cautioned that it would shutter production for around 10 days during the second quarter, including its most recent planned shutdown period in April. That temporary stoppage underlined how assembly-line issues still needs to be addressed to hit Tesla's target of 5, 000 Model 3 vehicles per week by the end of June.

The automaker stood by its production targets for its Model 3, assuring investors that its pivotal new vehicle continues to be on track and looked to ease concerns over its finances, stating it is aiming to achieve net profit in both its third and fourth quarters.

The company said it produced 2,270 Model 3s per week in the last week of April, up from 2,250 in the second week of the month. Net reservations for the Model 3 surpassed 450, 000 at the end of the previous quarter. Tesla said gross margins on the Model 3, which are currently slightly negative, would be near flat in Q2 and rise to “highly positive” in the H2 of the year.

While Tesla continued to burn through cash at a much more rapid pace than the previous quarter to hit its production goals, its burn rate was slower than analysts had expected. Tesla said its spending has been lowered and the firm would spend less than $3 billion in capital expenditures in 2018, lower than its 2017 total of $3.4 billion.

But free cash flow widened to -$1 billion in Q1 from -$277 million in Q4 of the previous fiscal year, excluding costs of systems for its solar unit.

Shares of Tesla were flat in extended trading after closing at $301.15.