Tesla Narrows Quarterly Loss as Revenue Soars

Tesla Inc. reports that its net loss in the fourth quarter shrank to $121 million from $320 million a year earlier, when it was rushing to launch the Model X electric crossover vehicle.

Revenue in October-December leaped 88% to $2.3 billion. Vehicle deliveries grew 27% to 22,300 units.

CEO Elon Musk reiterates the company’s aim to begin producing its $35,000 Model 3 electric sedan in July. The car—and the higher sales volumes it could generate—are considered critical for Tesla to achieve sustainable profitability. The company’s current lineup of EVs consists of the Model S electric sedan with a starting price of $71,500 and the Model X at $83,000.

Musk says the company intends to achieve weekly output of 5,000 Model S cars in the fourth quarter. Last year the company collected 373,000 refundable deposits from would-be Model S buyers and cautioned that shoppers who make a reservation for the car now aren’t likely to take delivery until the middle of next year.

Musk tells analysts that Tesla spent only about half the $1 billion it anticipated in the fourth quarter to tool up for the Model 3. The company did so in part by moving payments to capital equipment suppliers into this year.

Tesla currently has $3.4 billion in cash. It expects to spend at least $2 billion of that amount in the first half of the year, mainly on the Model 3 launch. Musk says the company won’t need additional funds for the new car but is likely to raise capital to replenish its cash supply.

The company expects its sales in January-June will total at least 47,000 units, about the same as its total for the second half of 2016.