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Tesla Is Burning Through Cash At An Even Greater Rate Than Expected

RACHEL MARTIN, HOST:

Some domestic business news now; good and bad news for the company Tesla. First, the bad - the company had its biggest quarterly loss - more than $700 million. The good - Tesla says it's on track to meet production goals for its new mass market car, the Model 3. Here's NPR's Sonari Glinton.

SONARI GLINTON, BYLINE: Usually earnings calls are pretty boring - trust me, I'm a business reporter - but Elon Musk, the CEO of Tesla, likes to keep it interesting. During their most recent earnings call, an analyst asked for updates on production of the Model 3. You know, give us more information early on because investors are getting nervous and the stock is volatile. Well, here's Musk's response.

(SOUNDBITE OF ARCHIVED RECORDING)

ELON MUSK: We have no interest in satisfying the desires of day traders. I couldn't care less. Please sell our stock and don't buy it.

GLINTON: In case you didn't hear a CEO telling people not to buy a stock - don't worry. He repeats himself.

(SOUNDBITE OF ARCHIVED RECORDING)

MUSK: I mean, I think that if people are concerned about volatility, they should definitely not buy our stock. I am not here to convince you to buy our stock. Do not buy it if volatility is scary. There you go.

JESSICA CALDWELL: Elon Musk can certainly manage to weave this magical aura around himself in which people will forgive him for things that they would be abhorrent to other auto companies.

GLINTON: Jessica Caldwell is an analyst with Edmunds. She says the quarter was an actual achievement for Tesla, but she says meeting production targets is car company 101.

CALDWELL: Tesla is a car company, first and foremost. So step one is always going to be make cars. The way that Tesla is different is that they have people signing up saying that they're going to buy these cars before there even was a car, which many companies don't have the luxury of. So the fact that they had that puts them at an incredible advantage.

GLINTON: If to be an automaker you have to make automobiles, Karl Brauer with Kelley Blue Book says, at some point, Tesla has to stop losing money.

KARL BRAUER: Everyone is going to rightfully question, you know, whether the company is going to be solvent at the end of the calendar year.

GLINTON: So it's like until he turns a profit, people are going to be wondering, can he turn a profit?

BRAUER: Yeah, and people have wondered whether he can turn a profit for a long time, but now they're starting to wonder if he's ever going to turn a profit and if he can do it in time or before he runs out of money and the investors run out of patience.

GLINTON: Meanwhile, Elon Musk says despite this quarter, the company could see profits by year's end. Sonari Glinton, NPR News.

(SOUNDBITE OF G--.DAMN.CHAN FEAT. FADEAWAY J'S "TO MY FRIENDS") Transcript provided by NPR, Copyright NPR.