The last few months have not been exactly happy for the Elon Musk team. Since the Model 3 debuted last summer, the optimism around the American company seems to have been substantially diluted.

The reason is very simple: Tesla is not producing enough Model 3, the benefits of the company suffer and the money available only decreases.

The latest financial results, presented yesterday to investors, have been a continuation of that same story. During the first quarter of 2018, Tesla obtained 3,408 million dollars in revenues, substantially improving the 3,288 million from the previous quarter and 2,696 million from the first quarter of 2017. However, this increase in revenues did not reduce losses, which increased up to 785 million dollars.

Tesla’s cash flow was also the subject of bad news. It was reduced by more than 700 million dollars, and surpassed (negatively) the analysts’ estimates.

“Increasing the production of Tesla Model 3 is vital to achieve profitability and positive cash flows.”

In spite of everything, Elon Musk remains calm in front of investors and analysts. The CEO of the North American company assured during the call and in the letter attached to the financial results, that Tesla will return to positive cash flows in the second half of 2018 (third and fourth quarter).

The key, how could it be otherwise, is the production of Model 3. Elon Musk acknowledged that the American company made a big mistake in the extreme automation of the production of this vehicle.

This situation, along with other factors, has caused bottlenecks in the manufacture of the Model 3, which should have reached a rate of 5,000 vehicles a week in December 2017. To this day, however, Tesla barely produces 2,000 vehicles a week.

Elon Musk hopes to increase that production rate to 5,000 units in the coming weeks. This will be vital to achieve profitability and positive cash flows in the second half of the year, just as his financial team has exposed.


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