Tesla posts record $671 million loss in Q3

Tesla is under pressure from investors and customers to hit deadlines before the end of the year. After launching the mass-market Model 3 sedan, Musk at the time said the automaker would manufacture 20,000 of those vehicles by December, but had only produced 260 as of Oct. 2.

On the call with analysts, Musk said Tesla would be producing “well into the thousands” of Model 3 sedans by the end of the year, hitting 5,000 per week by March 2018. He did not say how many units the automaker built in October.

Reports suggest Tesla has struggled to get its assembly line up and running.

Musk told analysts a subcontractor for the Gigafactory “really dropped the ball,” forcing engineers to rewrite software in four weeks. He added that welding for the mostly steel Model 3 body has proven to be a complex task, requiring a high concentration of manufacturing robots. An increased reliance on automation has also made it more difficult to use human labor to fill in for faulty machines.

“It is harder to supplement with manual labor than the [Model] S or X because it is a very high degree of automation,” Musk said. “It’s very unwieldy to supplement, or make up for a machine not working, with manual activity.”

Tesla has also grappled with its labor force. 

The company fired 700 workers in October after performance reviews. In response, the UAW filed unfair labor practice charges against the automaker, claiming the firings were to discourage employees unionize.

Musk responded to the reports, saying Tesla only fired 2 percent of its workforce during a routine performance review process that any automaker would use.

“Despite Tesla having extremely high standards, that are far higher than other car companies, which we need to have, in order to survive … only 2 percent of people didn’t make the grade,” he said.

Cash burn

After releasing third-quarter earnings in 2016, Musk told investors that Tesla would not need to raise more capital to launch the Model 3; however, the company received $1.2 billion from a share and convertible debt offering in March, and raised another $1.8 billion in a bond sale in August for Model 3 production. Tesla said it currently has $3.5 billion in cash on hand.

Musk also said in 2016 that a Tesla would be able to complete a cross-country trip without a driver touching the wheel by the end of 2017, and Tesla customers who paid up to $8,000 for autonomous capabilities would receive gradual updates throughout the year to vastly improve semiautonomous driving capabilities.

However, according to a class-action lawsuit, those features have yet to arrive, and Tesla's breakup with computer vision and camera sensor supplier Mobileye may have set back the automaker's progress.

The company did not give an update on when the cross-country drive would occur or when updated self-driving features would be available, but reiterated that all Tesla vehicles are capable of full autonomy with the current hardware suite.