Tesla said it was accelerating its Model 3 production overall, and working to get it started in China where the company just bought land for a factory.
“We are definitely going to do local production in China, we are moving rapidly on that,” Musk told analysts, adding that Tesla will be producing Model 3s in China next year and, longer-term, will also make batteries there.
The company said earlier this month that its factory in Shanghai would help it minimize the impact of tariffs there, which it said increased the tax rate on Teslas sold in China to 40 percent, compared with 15 percent for all other imported cars. The company paid 973 million yuan, or $140 million for an 864,885-square meter plot in Shanghai’s Lingang area for the new factory last week.
The company’s cash position also improved by $731 million during the quarter, despite repaying $82.5 million in bonds, the company said. It said it had $881 million in free cash flow, cash produced through operations minus capital expenses, and expects flat or positive free cash flow next quarter as well, even with greater debt coming due.
“Our cash position should remain at least flat in spite of our plan to repay $230 million of convertible notes in cash during Q4,” the company said.
Tesla’s had been burning cash at a rate of almost $1 billion per quarter, and is expected to need more to proceed with its plans to build factories in China and Europe. Tesla also needs to invest in its Fremont, California, factory to continue to ramp up production there. It also wants to develop the Model Y, a new roadster and a heavy-duty truck.
This is Tesla’s first earnings report since the company and Musk agreed to pay a combined $40 million to settle civil fraud charges with the Securities and Exchange Commission over his Aug. 7 tweets about taking the company private at $420 a share. It’s also Musk’s last report as chairman for at least three years. The agency is allowing him to stay on as CEO, but gave him 45 days to resign his role running the board as part of the settlement.
He declined to answer a question on the earnings call about the search for his replacement.
Shares of the company have been whipsawed over the last quarter with record trading volume and wild daily swings, depending on the news. The stock, which closed at $288.50 a share Wednesday, had tumbled by more 25 percent since Musk’s now-infamous take-private tweets sent shares soaring to an intraday high of $387.46 a share on Aug. 7.
Executives are holding a conference call with investors to discuss the company’s results at 6:30 p.m. ET.
—CNBC’s
Lora Kolodny
and
Robert Ferris
contributed to this article.
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