Shares of Tesla Motors soared nearly 8 percent today after the company disclosed it had accelerated production of its electric vehicles in the third quarter.
In a letter to shareholders, CEO Elon Musk and Chief Financial Officer Deepak Ahufa said the company had reached a "fundamental turning point" making the transition to a mass production car company that was able to pass through a proverbial "valley of death."
"Overall, I feel Tesla was really kind of past the point of high risk. Several months ago, I said I thought that the coming several months would be really the test for Tesla. And it's the classic phrase of, going through the valley of death, and I feel as that we are through that valley at this point," Musk later said during a conference call with analysts.
In the quarter, Tesla said that it increased its manufacturing capacity from 5 cars per week to 100 cars per week by the end of the period.
"That rate has doubled since last month and is now at over 200 cars per week or 10,000 cars per year, which is at the critical threshold needed for Tesla to generate positive operating cash flow," according to the shareholder letter. The company said it expects Tesla will double production again by next month, turning out a rate of 400 cars per week or 20,000 per year.
The announcement came as Tesla reported a loss of $110.8 million, or $1.05 a share in the third quarter compared with a year-earlier loss of $65.1 million, or 63 cents a share. Sales declined 13 percent in the quarter to $50.1 million from $57.7 million a year earlier.
Highlights from the quarter:
- Non-GAAP net loss: $97 million, or $(0.92) per share, and GAAP net loss of $111 million, or $(1.05) per share.
- Revenues were $50 million, up 88% increase from the prior quarter.
- Gross margin: Negative 17 percent.
- Research and development: $55 million on a non-GAAP basis, down 19 percent sequentially.
- Total cash: $109 million.