Tesla Model 3 production, cash burn in earnings spotlight

Tesla is expected to post red ink when it reports first-quarter results Wednesday, as the electric car maker spends heavily on new models and wrestles with Model 3 production delays.

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The Palo Alto, California-based company has burned cash at a brisk pace. Tesla spends an estimated $6,500 every minute, according to Bloomberg, while it pursues an aggressive plan to substantially increase production and add three vehicles to its portfolio in the next few years. In a note to clients, Goldman Sachs said Tesla likely ended the quarter with $2.9 billion in cash on hand. Even if Tesla doesn’t need extra cash, most investors believe the company will raise money to support the upcoming Model Y crossover and other growth plans, the investment bank added. Analysts at Jefferies have said Tesla may be forced to raise an additional $2.5 billion to $3 billion in cash this year.

But Tesla founder and CEO Elon Musk has said the company won’t need to seek additional capital, emphasizing that the third and fourth quarters will be profitable. Tesla’s most recent financial guidance calls for strong positive operating cash flow in the third quarter.

Wall Street expects Tesla to report a loss of $3.28 a share for the first quarter, compared with a smaller loss of $1.33 a share in the same period a year earlier. Revenue is projected to jump to $3.31 billion from $2.7 billion on an increase in overall deliveries.

Tesla disclosed in April that it built a record 34,494 vehicles in the first three months of the year, although Model 3 production still fell short of Tesla’s goal. Tesla made 2,020 Model 3 sedans in the final week of the quarter, while the company had targeted a production rate of 2,500 vehicles per week.

Despite the delays, Tesla has stuck by its plans to produce 5,000 Model 3s per week by the end of the second quarter.

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TSLATESLA INC.358.39-1.29-0.36%

“At this point, we see a potential capital raise only occurring after the beginning of July – and the ability to achieve the [5,000] production rate is known,” Goldman Sachs analyst David Tamberrino wrote in a note to clients.

Investors are also watching Tesla’s earnings report for any new details on the Model Y, Roadster and Semi electric big-rig, three vehicles currently in development.