Tesla Inc. is ramping up spending before the launch of the Model 3, leading to a reported net loss of $121.3 million in the fourth quarter.
The latest loss was narrower than the $320.4 million in red ink a year earlier for the electric automaker. The fourth quarter results follow Tesla’s second ever profit, as a public company, reported in the third quarter of 2016.
Tesla reported revenue of $2.3 billion in the fourth quarter, an increase of 88 percent from $1.2 billion in 2015. An increase in vehicle deliveries -- up 27 percent to 22,252 from 17,478 -- helped drive the surge in revenue.
Tesla attributed the latest quarterly loss to capital outlays of $522 million, primarily for expenditures on Model 3 production, a battery Gigafactory in Nevada and investments in customer support. The acquisition of solar panel company SolarCity, which closed in November, added $85 million in operating expenses.
The automaker said it is on track to begin Model 3 output in July with deliveries beginning in the second half of 2017. Tesla temporarily halted production at its Fremont, Calif., plant this month to prepare for the Model 3, and began test vehicle production this week.
Tesla said it expects to produce 5,000 vehicles a week by the end of 2017, and ramp up output to 10,000 vehicles a week in 2018.
On a conference call to discuss the quarterly results, Tesla CEO Elon Musk said the Model 3 is simpler to build and was “designed for manufacturing,” ensuring a shorter launch window than the Model S or Model X. However, Musk said the vehicle won’t be profitable until weekly output hits 5,000 units.
“We understand manufacturing a lot better than we did in the past,” he said.
While the Model 3 launch may be the biggest milestone on Tesla’s radar, there are more major investments on the horizon. The company said it plans on opening two or three gigafactories in addition to the Nevada location -- which is expected to cost $5 billion -- and a solar panel plant in Buffalo, N.Y.
Musk declined to give further details on the planned plants, but said there would be announcements later this year.
Tesla said it expects to deliver 47,000 to 50,000 Model S sedans and Model X crossovers in the first half of 2017.