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Tesla wants to build 500,000 cars two years sooner than planned

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Model 3 demand cited as the reason for the rush

Tesla's earnings are out for the first quarter of 2016, which saw a loss of $282 million on $1.15 billion in revenue; that represents slightly less revenue than the previous quarter but a slightly lower loss as well, which Tesla credit in part to "a careful eye on spending." Notably, Tesla says that the company's cash on hand "does not include any meaningful cash flow from Model 3 reservations," though it did use deposits in part to pay down a credit line.

The big news for Tesla in this report, though, isn't really the earnings numbers, which are more or less in line with analyst expectations. The bigger story is that the company says it wants to move up its date to reach the 500,000-cars-made milestone from 2020 to 2018, which Tesla calls a "challenging" goal that will "likely require some additional capital." To that end, it's backing off its plan to be cash flow positive in 2016, saying that "investing to meet that demand is the best long-term decision for Tesla."

By "demand," Tesla is of course talking about Model 3 deposits, which totaled 325,000 in the first week — beyond what Elon Musk and company seem to have been expecting. The company is in the process of ramping up Model X production and getting dinged for quality issues along the way; two Tesla production managers have recently exited, leading to speculation that Musk isn't taking the situation lightly. Clearly, manufacturing several times as many Model 3s will be even more difficult to do so while maintaining quality. In today's investor's letter, Tesla says it plans to exit the second quarter of the year making 2,000 vehicles (a mix of Model S and Model X) per week.


Tesla Model X hands on