Investor bullishness about Tesla has been growing. Last month, its rising stock price pushed its market capitalization past those of General Motors and Ford Motor, indicating sky-high hopes for the company’s prospects in the hypercompetitive auto industry.
Tesla shares were down 0.7 percent in extended trading after the earnings announcement, to $309, but remain almost 70 percent higher than they were five months ago.
Analysts are hoping that Mr. Musk will focus more on incremental improvements in sales, production schedules and earnings than on long-term, big-picture goals geared toward promoting clean energy.
“Over the past few years, Tesla has been riding positive sentiment, not gaining on fundamentals,” Clement Thibault, an analyst with Investing.com, said before the earnings announcement on Wednesday. “Confusing momentum driven by sentiment, rather than because of actual fundamentals, is a serious capital markets mistake.”
Tesla posted a wider-than-expected loss in the fourth quarter of 2016, although it continued to increase the number of vehicles being produced and sold.
Mr. Musk has pledged to begin producing the Model 3 this summer at Tesla’s plant in Fremont, Calif., which was once operated jointly by Toyota and General Motors.
The Model 3 — a compact, electric car that is expected to sell for about $35,000 — is considered Tesla’s pivotal product.
The company has built intense loyalty and demand for its two luxury offerings, the Model S sedan and the Model X sport utility vehicle. Both cost more than $90,000 with options, and their appeal is limited to a small number of wealthy customers.
The introduction of the Model 3, however, puts Tesla in the mainstream of the automotive market. And Mr. Musk has created high expectations not only for the car’s performance and quality, but for its widespread availability.
The company expects to make 500,000 cars a year by 2018, with the Model 3 accounting for the bulk of the production. That translates into a fivefold increase in its manufacturing pace.
Tesla is also dealing with growing pains in its labor force. Some production employees have accused the company of suppressing efforts to unionize its work force.
Last month, the United Auto Workers — the union representing hourly workers at the three big Detroit automakers — filed charges with the National Labor Relations Board asserting that Tesla was trying to block its workers’ organizing efforts.
Tesla has said the allegations “are entirely without merit.”
Source: New York Times – Technology