Tesla Inc. CEO Elon Musk's rocket venture is making major strides in space, but his car company is struggling to find profits on the ground.
A day after SpaceX successfully launched the most powerful rocket in the world, Tesla posted a $675.4 million net loss for the fourth quarter of 2017, compared with a net loss of $121.3 million a year ago. The company reported total revenue of $3.29 billion for the quarter, up from $2.28 billion in the fourth quarter of 2016.
Tesla has posted profits in just two quarters since it became a public company. Automotive revenue in the fourth quarter totaled $2.7 billion, up from $1.99 billion during the last three months of 2016.
The company said it is losing money on the Model 3, given the slow production ramp-up, and will continue losing money on the Model 3 in the first quarter. "Since Model 3 production was in the early stages of the ramp, allocation of full operating costs and depreciation made its gross margin negative," the company said in a letter to shareholders. Non-GAAP automotive profit margins were 13.8 percent in the fourth quarter of 2017, down from 22.2 percent in the fourth quarter of 2016.
"If we can send a roadster to the asteroid belt we can probably resolve Model 3 production," CEO Elon Musk said on a call with analysts. "It's just a matter of time."
Musk also said Tesla's head of sales and service Jon McNeill had left the company and the automaker was not looking for a replacement. Bloomberg reported during the call that McNeill had joined ride-hailing company Lyft as chief operating officer.
Tesla said it plans to reach consistent profitability this year.
"At some point in 2018, we expect to begin generating positive quarterly operating income on a sustained basis," the company said. "With the planned ramp of both Model 3 and our energy storage products, our rate of revenue growth this year is poised to significantly exceed last year's growth rate."
The automaker is increasing production of its Model 3 sedan, its first vehicle intended for mass production. In January, Tesla pushed back its target to produce 5,000 vehicles a week to the second quarter of this year, but said it had reached a rate of 1,000 cars a week at the end of 2017. Tesla said Wednesday it plans to hit a rate of 2,500 vehicles a week at some point in the first quarter.
The automaker took $854 million in customer deposits for the Model 3, semitruck and second-generation Roadster, compared with $664 million in deposits in the year-ago time frame.
Tesla also opened up a new source of funding in January, when it began selling lease-backed securities. The Wall Street Journal reported on Feb. 1 that the automaker had sold $546 million in such bonds.