Just as Tesla Inc. is signaling a smooth road ahead for its most important vehicle, the electric-car maker led by Elon Musk is losing another major top executive.
The Model 3 sedan, Tesla’s cheapest plug-in vehicle yet, remains on track to arrive in July, and production of the car should reach about 5,000 units by the end of the year, according to a letter to shareholders Wednesday related to the company’s latest quarterly results. The Model 3’s timing has been insulated so far from the departure of some senior leaders, the latest of which will be Chief Financial Officer Jason Wheeler.
The steady state of the model Tesla plans to sell for close to $35,000 before incentives has assuaged investors who have bid up the 14-year-old company’s market value to rival automakers that have been around more than a century and sell millions of cars a year. Wheeler’s departure after about 15 months follows the exits last year of managers including the director of the Autopilot system and top production chiefs.
Tesla posted a fourth-quarter loss, excluding some items, of 69 cents a share, narrower than the $1.14 a share average estimate among analysts surveyed by Bloomberg. The electric-car maker said it expects to deliver as many as 50,000 vehicles in the first half of the year.
“The jury is still out as to whether or not they can sell enough Model 3s to become profitable,” Michael Wolf, the chief executive officer and co-founder of Activate, a technology consulting firm, said Wednesday on Bloomberg Television. “Up until now, they’ve been a luxury car. Going forward, the question is whether or not they can enter the mass market.”
Tesla shares climbed 1.6 percent to $277.90 as of 6:25 p.m. in New York. The stock advanced 28 percent this year at the close of regular trading.
Model 3 output should exceed 10,000 vehicles a week by sometime in 2018, according to Tesla’s letter. The car will rely on the so-called gigafactory east of Reno, Nevada, that began producing battery cells earlier this year in partnership with Japan’s Panasonic Corp. The two also have said they’ll start jointly making solar cells and panels this summer at a factory in Buffalo, New York.
Thorn in Side
“It is all about the Model 3, and Tesla says the suppliers are on time, which historically has been a thorn in Tesla’s side,” said Ben Kallo, an analyst at Robert W. Baird & Co. “SolarCity is not the drag that people thought it would be, and it’s actually adding cash to the balance sheet.”
The maker of higher-priced Model S sedans and Model X sport utility vehicles has had trouble meeting previous production forecasts and blamed a series of issues throughout 2016 for missing quarterly and annual projections. Tesla said earlier this year it delivered about 22,200 cars worldwide in the fourth quarter, bringing its total to 76,233 in 2016, less than an initial forecast for 80,000 to 90,000.
Tesla expects to finalize locations for at least two more plants later this year, and possibly as many as five gigafactories, according to the letter, which doesn’t specify what the sites will build.
Chief Executive Officer Musk has vowed to make 500,000 cars annually in 2018. Meeting that ambitious target will depend a great deal on the Model 3, which is expected to boast about 215 miles of battery range per charge. Tesla reported 373,000 pre-orders for the Model 3 as of May, when it last updated its reservation tally.
CFO Departure
Wheeler, a former vice president of finance at Google, is leaving to “pursue opportunities in public policy,” Tesla said on its blog. Wheeler participated in Wednesday’s conference call and will stay through early April as Deepak Ahuja leaves retirement to return to the post.
Ahuja, a former vehicle line controller at Ford Motor Co., will help the company scale up for the Model 3, Tesla said. He served as Tesla’s CFO from July 2008 to November 2015.