Tesla says Model 3 on track for volume production by September

Wed Feb 22, 2017 7:19pm EST
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By Alexandria Sage

SAN FRANCISCO (Reuters) - Tesla Inc (TSLA.O: Quote) said on Wednesday its mass-market Model 3 sedan was on track for volume production by September, encouraging investors who see the electric vehicle as the avenue to profitability for the young company.

But the carmaker's operations continued to burn through cash, and Chief Executive Elon Musk told analysts on a conference call that he may ask Wall Street for more.

"According to our financial plan, no capital needs to be raised for the Model 3 but we get very close to the edge," Musk told investors on a conference call. Tesla plans an additional $2 billion to $2.5 billion in capital expenses before the Model 3 launch and has $3.4 billion cash on hand.

"We're considering a number of options but I think it probably makes sense to raise capital to reduce risk," Musk said.

Musk said Chief Financial Officer Jason Wheeler, in his role for just over a year, would leave in April to work in public policy. He will be replaced by former Tesla CFO Deepak Ahuja, who was popular with investors.

Tesla, whose shares rose as much as 3 percent after the bell before settling up around 1.6 percent to $277.90, beat analysts' expectations for revenue. Its adjusted loss missed the consensus target calculated by Thomson Reuters I/B/E/S, although there was an unusually large range of estimates due to confusion over accounting for the acquisition of solar installer SolarCity.

Ivan Feinseth, director of research at Tigress Financial Partners, said Tesla "delivered the results the market has been expecting" that drove the stock from a year low of $167.84 last February to a year high of $287.39 last week.

By late spring or early summer, Feinseth estimated, Tesla will likely raise more money, noting that today's highs could make it sooner rather than later.   Continued...

A wheel of a  prototype of the Tesla Model 3 on display in front of the factory during a media tour of the Tesla Gigafactory, which will produce batteries for the electric carmaker in Sparks, Nevada, U.S. July 26, 2016.  REUTERS/James Glover II/File Photo