Tesla Burns A Record $16 Million Per Day, Delays Model 3 Delivery: Stock Tumbles

One month after Tesla surprised markets with an unexpectedly low production output of its much anticipated Model 3, delivering just 260 cars far below the 1,500 expected, which according to a follow up report from the WSJ was due to parts of the car actually being made by hand, investors were fearfully looking forward to today’s Q3 earnings report despite Elon Musk’s assurance that Tesla had its “all-time best quarter” for Model S and X deliveries. Those fears were justified when moments ago Tesla reported an adjusted, non-GAAP loss of ($2.92), far worse than the expected loss of ($2.27), which was more than double the ($1.33) loss in Q2.

The silver lining is that in the third quarter, Tesla generated revenue of $2.98 billion, slightly better than the $2.93 billion expected, but this was more than offset by the plunge in the Automotive gross margin, which in Q3 was 18.7 non-GAAP, far below the 25.0% in the previous quarter, and worse than expected.

It was all downhill from there, however, and in what has become the most sensitive topic for the EV maker, Tesla continued to burn epic amounts of cash, outdoing itself in Q3 with a record cash burn of $1.4 billion – or roughly $16 million per day: an unprecedented amount. This was higher than the $1.2 billion consensus forecast. In Q3, Tesla’s CapEx was $1.116 billion, a number which is set to continue pressuring its balance sheet as the company continues to ramp up Model 3 production. Indeed, Tesla announced that capital expenditures are expected to be approximately $1 billion in Q4,“driven largely by milestone payments on Model 3 production equipment, as well as Gigafactory 1, and further expansion of stores, service centers, delivery hubs and the Supercharger network.”

Understandably, the cash burning behemoth was proud to announce that it had $3.5 billion in cash on hand at the end of Q3. There is just one problem, and this wasn’t announced in the letter: Tesla also had $3.9 billion in accounts payable and accrued liabilities, a number that was unchanged from the previous quarter, as the company drains all net working capital sources of cash it can find.