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Analysts doubt Tesla's promise of profitability by second half

Analysts doubt Tesla's promise of profitability by second half

by Justin King

Most do not expect Tesla to become cash positive until the end of the first quarter next year.

Analysts continue to doubt Tesla's expectation of profitability in the second half of 2018, raising the possibility of the need for more outside funding as the company continues to ramp Model 3 production volume.

The Economist used to be boring, but smart with a wicked dry wit. Now it's just boring (sigh). Tesla will be profitable & cash flow+ in Q3 & Q4, so obv no need to raise money.

— Elon Musk (@elonmusk) April 13, 2018

Analysts surveyed by Reuters, on average, predict the company will not become cash positive until the first quarter of 2019.

"The company's financial predictions may be losing credibility within the financial community," Cowen & Co's Jeffrey Osborne wrote in an investor letter earlier this month.

The company aims to eventually make a 25-percent margin on the Model 3. If accurate, the nameplate's profitability will be remarkable in an industry that historically struggles to achieve consistent margins above 10 percent.


To help keep development and production costs down, Tesla recently decided to carry over the Model 3's platform for the Model Y instead of building an entirely new architecture.