Electric-car company Tesla (NASDAQ: TSLA) has been under the microscope recently. A $785 million loss in its first quarter — about double its net loss in the year-ago quarter — has investors watching closely to see if the automaker can ramp up Model 3 production fast enough to reverse its losses. Further, the company’s rapid Model 3 production ramp-up and its ambitious production targets for the important vehicle mean the company is in the middle of a major transition.
With this backdrop, investors were listening eagerly during the company’s annual shareholder meeting on Tuesday. During the meeting, Tesla CEO Elon Musk addressed concerns about the automaker’s profitability, gave some updates on the Model 3, and provided information about other important areas of its business. Here are some of the most interesting takeaways from the meeting.
1. Model 3 production is soaring
One of the most important narratives at Tesla has been the company’s efforts to ramp up Model 3 production to a rate of 5,000 units per week. When the Model 3 was first launched last summer, the automaker was initially aiming to achieve this production rate by the end of 2017. But Tesla delayed this target twice, settling on its current goal to achieve this production rate around the end of its second quarter.
Tesla is on track with this target, Musk said on Tuesday. He said he expects Tesla to achieve this production rate by the end of June.
2. Model 3 is the best-selling mid-sized premium sedan in the U.S.
Though Tesla is behind its initial targets for Model 3 production, that doesn’t mean the vehicle’s production hasn’t been increasing quickly — it just hasn’t been increasing according to plan. In Tesla’s second quarter, Model 3 production jumped sharply, rising from just 2,425 Model 3 vehicles produced in Q4 to nearly 10,000 units in Q2. More importantly, Tesla achieved a production rate of 2,000 Model 3s per week at the beginning of its second quarter.
This has meant Model 3 deliveries have jumped. Indeed, Model 3 is now the best-selling mid-sized premium sedan in the U.S. on a monthly basis, now outselling Daimler‘s popular Mercedes-Benz C-Class, according to Tesla.
3. Profitability is still on the way
Tesla has previously indicated that when it achieves a sustained Model 3 production rate of 5,000 units or more per week, the greater economies of scale will make Tesla profitable on a GAAP basis. As a result, management forecast it wouldn’t need to raise any capital through debt or equity before the end of the year.
Since Tesla believes it is on track to achieve its target Model 3 production rate of 5,000 units per week, Musk said on Tuesday that Tesla still expects to be profitable on a GAAP basis in Q3 and Q4. In addition, Musk said Tesla still doesn’t expect to raise any capital during the year through debt or equity.
4. The new Roadster’s wild specs were just for the base model
When Tesla made a surprise announcement of a new version of its Roadster sports car last year, the vehicle’s specifications were downright wild. The sports car would have a zero-to-60 time of 1.9 seconds, a top speed of 250 mph, and a driving range of 620 miles, Tesla said.
However, Musk noted on Tuesday that these were only the specifications of the base version of the vehicle. In other words, Tesla plans to launch a version of the Roadster with even more impressive specifications.
5. Tesla will build a factory in Shanghai
The electric-car company used its shareholder meeting to announce plans for a factory in Shanghai. The new factory will both manufacturer batteries and assemble vehicles, Tesla said.
The announcement of a Tesla factory in China follows the country’s recent announcement that it would allow electric-car makers to build factories in the country without having to form a joint venture to operate there.
Tesla’s revenue in China has soared, rising from $319 million annually in 2016 to over $2 billion in 2017. By manufacturing vehicles in China, Tesla can better serve the important market and avoid import tariffs.
Overall, Tesla’s shareholder meeting seemed to suggest the company is on track with its plans. But investors will have to wait until the company’s quarterly update on vehicle production and deliveries next month, and its second-quarter update around the end of July or the beginning of August, to get more specific data on the company’s recent performance.
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