Production delays have curtailed deliveries of the vehicle to customers - only 1,550 deliveries in the fourth quarter, far below the 4,100 vehicles expected by analysts - meaning revenue from the highly anticipated vehicle has yet to hit Tesla's bottom line.
And Musk said the company would turn a profit during 2018. During the EV maker's fourth-quarter earnings call, chief executive Elon Musk told investors that the company would start capital investments for Model Y production in the third or fourth quarter of 2018. Still, Musk said he is "cautiously optimistic" that Tesla will be profitable this year. Yet it cited the difficulty of accurate production forecasts.
The automotive company added that it delivered 1,550 of the mass-market cars during its fourth quarter, which is only slightly more than half of what analysts had projected. The Palo Alto, California-based automaker is struggling to meet production targets for its first mass-market vehicle, the Model 3 sedan.
"If we can send a Roadster to the asteroid belt, we can probably solve Model 3 production", he said during the call, referring to the 2008 Tesla Roadster that was included as the rocket's payload.
Tesla reported negative free cash flow of $276.7 million, compared with $1.4 billion in the previous quarter, and $969.8 million in the fourth quarter a year ago.
Compensation for Musk, 46, will be based on a new 10-year performance stock award that could give him billions worth of company shares, or nothing at all if the company fails to meet its targets.
"With its cash drain growing and production and gross margin visibility low, we consider Tesla a show-me story", wrote Bernstein analyst Toni Sacconaghi in a note published Wednesday before the release of results. Revenues jumped 44% YoY to $3.3 billion on the back of strong sales of the Model S and Model X vehicles.
Tesla reported completed deliveries of 28,425 Model S and Model X vehicles and 1,542 Model 3 deliveries in the fourth quarter. Tesla fans will certainly hope that it gets it done in three months instead of six. However, Jon McNeill, president of global sales and service, is leaving the company. It's a stance that provokes a lot of debate among experts in the field, many of whom, including former Tesla employees, disagree that full autonomy can be managed with a sensor load out that doesn't include LiDAR. S. automaker, just behind, which had net revenue of $145.6 billion in 2017. Tesla will make significant changes in the wiring and battery architecture to make it easier to manufacture than Model 3. But some analysts have questioned whether his myriad of other interests, from space exploration to tunnel boring technology, are a distraction at a critical time within Tesla.
Net loss widened to $675.4 million, or $4.01 per share, for the fourth quarter ended December 31 from $121.3 million, or 78 cents per share, a year earlier. Analysts polled by Thomson Reuters were calling for an average loss of $3.12 per share to close out fiscal 2017.
On an adjusted basis, Tesla lost $513 million, or $3.04 per share.
Tesla shares outperformed the market over the previous 12 months, up 32 percent through Wednesday compared with the S&P 500's 17 percent return.