Is the Tesla hype wave crashing?

Tesla has successfully positioned itself as the future of automobiles. But in the present, Tesla doesn't make many cars. CNN's Peter Valdes-Dapena explains the Tesla hype machine, and what happens if that hype wanes.

Posted: Aug 2, 2018 6:05 AM
Updated: Aug 2, 2018 6:10 AM

Tesla's finances are so dicey that the largest quarterly loss in the company's history couldn't bring investors down.

The electric car company said it lost more than $717.5 million in the second quarter. But it ended up with $2.2 billion in cash at the end of June. That meant Tesla burned through $430 million worth of its unrestricted cash reserves last quarter.

Tesla spared no expense to reach its long-sought milestone of making 5,000 Model 3s in a week. But with low cash reserves, investors have worried that Tesla would need to borrow more money to keep the company afloat.

The company said it maintained its level of production, making 5,000 Model 3s in a week multiple times in July. Tesla also said it wants to churn out 10,000 Model 3s per week "as fast as we can." It expects to produce between 50,000 and 55,000 Model 3s this quarter.

Tesla's stock was up nearly 5% in after-hours trading.

The Model 3 is Tesla's first vehicle that's aimed at a more mass-market audience, and it debuted to great fanfare, with thousands clamoring to put down $1,000 reservations for the vehicle.

But analysts have said in recent weeks they thought demand for the Model 3 might be waning because of long wait times. Tesla still hasn't made any $35,000 base model cars available.

Related: Has Elon Musk lost control of his hype machine?

CEO Elon Musk made the bold promise earlier this year that Tesla would post its first quarterly profit in years this fall, Tesla doubled down on that promise again in a letter to investors Wednesday.

Some analysts viewed that claim optimistically. Others are more skeptical

"The projection of profitability in the second half of the year is admirable, but is based on selling a far more expensive version of the Model 3 then many consumers had expected," Rebecca Lindland, executive analyst at Kelley Blue Book, said in an emailed statement. "Can they sustain profitability if and when they start selling the more affordable, $35K version? Insights into the quality and quantity of the reservation pipeline, while boring, would provide investors with confidence with profitability projections."

Tesla recently laid off about 9% of its staff. Musk explained in June that the job cuts were part of a restructuring plan to eliminate "duplication of roles" and added that the layoffs should reduce costs and help the firm on its path to profitability.

Related: Tesla's magic is wearing off as Model 3 excitement dwindles

Wednesday's earnings report also comes as Musk has faced scrutiny for recent erratic behavior.

Earlier this month, he made an unfounded criminal accusation about one of the rescuers who helped save a group of young boys and their soccer coach from a flooding cave in Thailand.

During May's conference call with analysts, Musk's behavior was bizarre. He told analysts them their questions were boring, and spent a significant amount of time fielding questions from a YouTuber.

Tesla's stock has fallen more than 13% over the past six months.

West Lafayette
Cloudy
60° wxIcon
Hi: 77° Lo: 45°
Feels Like: 60°
Kokomo
Cloudy
64° wxIcon
Hi: 76° Lo: 46°
Feels Like: 64°
Rensselaer
Cloudy
55° wxIcon
Hi: 78° Lo: 44°
Feels Like: 55°
Fowler
Cloudy
60° wxIcon
Hi: 77° Lo: 46°
Feels Like: 60°
Williamsport
Cloudy
60° wxIcon
Hi: 77° Lo: 45°
Feels Like: 60°
Crawfordsville
Cloudy
63° wxIcon
Hi: 76° Lo: 43°
Feels Like: 63°
Frankfort
Cloudy
63° wxIcon
Hi: 76° Lo: 44°
Feels Like: 63°
Delphi
Cloudy
60° wxIcon
Hi: 78° Lo: 45°
Feels Like: 60°
Monticello
Cloudy
60° wxIcon
Hi: 80° Lo: 47°
Feels Like: 60°
Logansport
Cloudy
63° wxIcon
Hi: 76° Lo: 44°
Feels Like: 63°
After bout of some rain, a long, long warm, dry stretch!
WLFI Temps
WLFI Planner

Indiana Coronavirus Cases

Data is updated nightly.

Cases: 944708

Reported Deaths: 15343
CountyCasesDeaths
Marion1287051987
Lake634321097
Allen53759760
Hamilton43980448
St. Joseph42010590
Elkhart33651491
Vanderburgh30486449
Tippecanoe26872250
Johnson23685417
Hendricks22354341
Porter21799347
Clark17493231
Madison17439384
Vigo16209284
Monroe14515191
LaPorte14350239
Delaware14134222
Howard13921273
Kosciusko11448135
Hancock10886166
Warrick10715177
Bartholomew10589169
Floyd10471206
Wayne10020226
Grant9165204
Morgan8895160
Boone8417111
Dubois7748123
Dearborn764990
Henry7648130
Noble7435101
Marshall7384128
Cass7209117
Lawrence6999153
Shelby6616111
Jackson659186
Gibson6177107
Harrison606286
Huntington603195
Montgomery5830105
DeKalb578391
Knox5506104
Miami545788
Putnam540568
Clinton535965
Whitley526553
Steuben499768
Wabash486292
Jasper481860
Jefferson472892
Ripley456077
Adams445568
Daviess4209108
Scott407965
White392957
Clay392857
Greene390592
Wells388784
Decatur385996
Fayette377278
Posey361541
Jennings354356
Washington333747
LaGrange323575
Spencer319536
Fountain317955
Randolph314889
Sullivan308449
Owen284863
Starke281464
Fulton280054
Orange276859
Jay256338
Perry252552
Carroll244929
Franklin240538
Rush235630
Vermillion234450
Parke221020
Tipton210555
Pike209539
Blackford169634
Pulaski165551
Crawford146718
Newton145245
Benton143516
Brown135546
Martin129317
Switzerland126210
Warren115516
Union97711
Ohio80111
Unassigned0479

COVID-19 Important links and resources

As the spread of COVID-19, or as it's more commonly known as the coronavirus continues, this page will serve as your one-stop for the resources you need to stay informed and to keep you and your family safe. CLICK HERE

Closings related to the prevention of the COVID-19 can be found on our Closings page.

Community Events