Nov 1, 2017

Tesla shares plunge as Musk is on the defensive

Photo: Chuck Burton / AP

Tesla shares plunged by as much as 5% in after hours trading and CEO Elon Musk was on the defensive in an earnings call as the electric-carmaker reported a $619.4 million loss today — its biggest ever. Again and again, the usually chest-out Musk told Wall Street analysts about the growing pains of ramping up to produce hundreds of thousands of cars a year, at one point declining even to forecast how many units of the ostensibly company-changing Model 3 Tesla would produce in the last quarter of the year, apart from finally saying it will be in the thousands per week.

"We are in a vertical climb here," he said of the company's ramp-up difficulties.

What is vexing Musk: Analysts regard the Model 3 as make or break for Tesla, which is spending terrific sums of money to ramp up not only the Model 3 but the gigafactory, the gigantic lithium-ion battery factory Musk is building in Nevada. Everything is on the line for Tesla. Musk either needs to get the kinks out — Tesla was supposed to be producing 5,000 Model 3s a day by the end of the year, a milestone that is now pushed out to next year — or he could see his pumped-up share price absorb a far more serious hit.

The biggest problem: Musk said battery production is the greatest bottleneck. He said one unidentified battery subcontractor had completely fallen down on the job, requiring a wholesale rewrite of a software program from scratch over a four-week period. "There's still a long way to go" to resolve battery production, he said.

  • The effect of baring his soul was to make him seem not in full control of the process at a time one might have expected him to have long-ago taken charge, especially given the gravity of the situation not only to Tesla, but to the creation of an electric car industry, which he has always said is his aim.
  • It is not too dramatic to say that, given the absence of any other electric with the enormous consumer demand enjoyed by the Model 3, the near-term future of global electric cars rides on him resolving the problems and making hundreds of thousands of more or less problem-free units of the mainstream vehicle.
  • One wonders why Musk — given that his prior S and X models were both delivered more than a year late — he didn't simply wait before delivering the Model 3 until the production facilities were ready.

Musk punts: Tesla's chief said everything will be better next year, and basically told the analysts to wait until the next earnings call, when there would be much more favorable news. A few weeks into the new year will bring "exponential growth" in Model 3 production, he said. "We're on it. It's going to take a few months longer than we expected."

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Coronavirus dashboard

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  1. Global: Total confirmed cases as of 3 a.m. ET: 665,164 — Total deaths: 30,852 — Total recoveries: 140,225.
  2. U.S.: Leads the world in cases. Total confirmed cases as of 3 a.m. ET: 124,665 — Total deaths: 2,191 — Total recoveries: 1,095.
  3. Federal government latest: President Trump announces new travel advisories for New York, New Jersey and Connecticut, but rules out quarantine enforcement. Per the CDC, residents of those states must now "refrain from non-essential domestic travel for 14 days," with the exception of critical infrastructure industry workers.
  4. State updates: Alaska is latest state to issue a stay-at-home order — New York is trying to nearly triple its hospital capacity in less than a month and has moved its presidential primary to June 23. Some Midwestern swing voters who backed Trump's handling of the virus less than two weeks ago are balking at his call for the U.S. to be "opened up" by Easter.
  5. World updates: In Spain, over 1,400 people were confirmed dead between Thursday to Saturday.
  6. 🚀 Space updates: OneWeb filed for bankruptcy amid the novel coronavirus pandemic.
  7. Hollywood: Tom Hanks and Rita Wilson have returned to U.S. after being treated for coronavirus.
  8. What should I do? Answers about the virus from Axios expertsWhat to know about social distancingQ&A: Minimizing your coronavirus risk
  9. Other resources: CDC on how to avoid the virus, what to do if you get it.

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Coronavirus updates: Global death toll tops 30,000

Data: The Center for Systems Science and Engineering at Johns Hopkins, the CDC, and China's Health Ministry. Note: China numbers are for the mainland only and U.S. numbers include repatriated citizens and confirmed plus presumptive cases from the CDC

The novel coronavirus has now killed more than 30,000 people around the world — with Italy reporting over 10,000 deaths, per Johns Hopkins data.

The big picture: The number of deaths from COVID-19 in the U.S. surpassed 2,000 on Saturday. The United States leads the world in confirmed coronavirus infections — more than 124,000 by early Sunday. The number of those recovered from the virus in the U.S. passed the 1,000-mark on Saturday evening.

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Photo: Olivier Douliery/AFP via Getty Images

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The big pig picture: President Trump has called the antiviral drug "promising," but the results of six clinical trials on this investigational medicine are still being conducted, so its effectiveness the treatment of the novel coronavirus has yet to be proved. The World Health Organization is involved in the tests.

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