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OnInnovation / Creative Commons

Tesla continues to burn through cash at a bonfire rate, and doubts remain that CEO Elon Musk can deliver his new mainstream electric Model 3 at the pace he is promising. But Tesla's share price shot up by 3.8% in after-hours trading when it announced sharply higher-than-expected quarterly earnings, and Musk delivered a decidedly ebullient assessment of the company's prospects.

"This is the best I've ever felt about Tesla," Musk told Wall Street analysts in a second-quarter earnings call.

The $35,000 Model 3 is important both to Tesla and the market. If it succeeds in capturing large, year-after-year sales, Musk's big bet on creating a new carmaker will be a stunning success; conversely, if sales are only middling or peter out, Tesla will probably fail — there does not appear to be a Plan B. As to the market, the Model 3 has driven almost every major carmaker on the planet to plan their own electrics.

One thing raising Musk's spirits is the public reception for the Model 3. He said a telling measure is what journalists said after going for a spin at its July 28 coming-out ceremony: "Eighty percent of the journalists said they would buy the cars themselves. The other 20% said 'maybe.' This is crazy. I've never seen anything like it."

Tony Seba, a professor at Stanford University, told Axios that Musk has already succeeded with the Model 3. "This is the car that proves it can be done," Seba said. "Essentially, everybody else will have to chase him. That will produce better and cheaper electric cars."

The main numbers:

  • Tesla lost $1.33 a share in the quarter, far less than the $1.88 consensus expectation. According to Barclays' Brian Johnson, the beat was driven largely by $100 million in zero-emission-vehicle credits from California. But even without those 50 to 60 cents a share, Tesla's results would have met the consensus expectations.
  • The company has 455,000 net orders of the Model 3, less than the 500,000 he had estimated on July 28. He said the difference is cancellations.
  • Musk said reservations for the Model 3 have accelerated in the half-week since the launch, with 1,800 Model 3s being ordered every day. Orders also have accelerated for the upscale Model S and the Model X SUV.

Musk also said:

  • The company spent $959 million in the second quarter, largely on building the giant battery Gigafactory and tripling the number of superchargers in the U.S. network. Spending in the second half of the year will be about $2 billion.
  • Tesla ended the quarter with $3 billion in cash on hand.
  • Musk isn't currently considering selling more stock to build up more cash, but is thinking of selling bonds.

One thing making the Model 3 easier to manufacture than Tesla's prior models is the variety of options offered to customers: The different possible permutations of the Model 3 are 100, versus 1500 for the Model 3, which "significantly reduces manufacturing complexity and streamlines the purchasing process for our customers," Tesla said in an earnings statement. "This densification sets the stage for us to produce over 500,000 Model 3 vehicles annually."

In a note to clients, Barclays' Johnson — a Tesla skeptic — was not convinced: "We don't put much stock in the 1,800 daily order rate. We'd prefer to see how the aggregate order book builds, and what the sales conversion is. ... It sure looks like a nice outlook post the self-described 'production hell'. But with a wide set of parts required to meet the ramp, is it achievable?"

Go deeper

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Illustration: Aïda Amer/Axios

A new public benefit corporation backed by billionaires Reid Hoffman, George Soros, and others is launching Tuesday to fund new media companies and efforts that tackle disinformation.

Why it matters: Good Information Inc. aims to fund and scale businesses that cut through echo chambers with fact-based information. As part of its mission, it plans to invest in local news companies.

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Scoop: Sequoia Capital just blew up the VC fund model

Illustration: Aïda Amer/Axios

Sequoia Capital, one of the world's oldest and most successful venture capital firms, is forming a single fund to hold all of its U.S. and European investments, including stakes in publicly-traded companies, Axios has learned.

Why it matters: Venture capital is the money of innovation, but the industry itself rarely innovates. This is a radical exception.

Exclusive: Company says it will put Trump back online

Photo Illustration: Rafael Henrique/SOPA Images/LightRocket via Getty Images.

RightForge, an internet infrastructure company that courts conservatives, will host former President Trump's new social media platform, CEO Martín Avila told Axios on Monday.

Why it matters: By relying on a web hosting service that won't cut ties over controversial comments, Trump's new platform could avoid the problems conservative network Parler faced when Amazon pulled its web services following the Capitol insurrection.