Tesla flags path towards profit as Model 3 worries steady, to tap Asian debt markets to fund China factory

Tesla said it would produce its new Model 3 sedan at a profit after several recent weeks in which output stabilised, buoying hopes that the electric vehicle maker led by Elon Musk will stanch its financial losses in the second half of the year.

Chief Executive Musk is under intense pressure to prove he can deliver consistent production numbers for the sedan, Tesla’s lowest-priced model and the key to its plans to become a mass-market carmaker, after a host of manufacturing challenges and concerns it was running through cash too quickly.

Despite Tesla reporting a record loss that doubled to US$718 million in the second quarter, shares jumped as much as 11 per cent in after-hours trading, as investors focused on steadier production volumes and a slower rate of cash burn. That put it on track to retake the title of most valuable US carmaker from General Motors Co.

The company cut its capital spending plans and said it would not hit its long-term rate of producing 10,000 Model 3s per week until next year, trading off production ramp speed for financial health.

“We like the more muted tone of the company’s outlook, with the absence of unnecessary new stretch goals,” said CFRA analyst Efraim Levy. “Perhaps it reflects a more cautious Elon Musk.”

The outspoken Musk, who told analysts last quarter that he refused to answer their “boring” questions, apologised multiple times on Wednesday during a post-earnings call for his past behavior.