When Tesla Chairman and Chief Executive Elon Musk took the stage at the company’s annual meeting Tuesday, he was far more subdued than he’s been in most of his recent performances. Those events often come off like high-spirited rallies for the company and its products.

To the extent Wall Street gets a say, the latest episode of the Musk-capades was a hit. Tesla’s shares soared on Wednesday, closing up nearly 10% to $319.50.

Musk was confessional. The last several months — which saw production snafus bedevil the launch of the company’s all-important Model 3 sedan, claims of high worker injury rates at its factory and questions about the safety of Tesla’s automated driving software — were the most “hellish” of his life, Musk, 46, said.

He apologized for “cheesy” sentiment, saying, “We build cars with love. We pour our heart and soul in the product. We really care.”


Unlike a contentious conference call with analysts on May 3 — when Musk called stock analyst questions “stupid” and “boring” — he was polite nearly throughout.

Sure, he stuck a few knives in the tires of traditional automakers. Their cars, he said, are “built by the marketing department, the finance department.” They possess “no soul.” But a month after referring to underperforming temporary workers as “barnacles,” Musk thanked workers for the sacrifices they had made to move more Model 3s out the door.

He fessed up, to some degree, to an “over-automation” mess that had management trying to figure out what robots and people each do best — despite having already spent big money for automation hardware, software and service.

“One of the biggest mistakes we made was making things that are super easy for a person to do but super hard for a robot to do,” Musk said Tuesday.


Now, according to Musk, automobile production is running so smooth that “all parts of the Model 3 production system have demonstrated a 500-car-per-day capability.” That’s 3,500 cars a week.

The number will “quite likely” grow to 5,000 cars a week by end of June, Musk claimed, with the help of a new, third assembly line that is about to go into operation. “That would certainly help them get production up to the 5,000,” said Efraim Levy, analyst at CFRA Research.

Whether demonstrated capability can be translated into full, steady, dependable production is yet to be determined, probably even by Tesla. Bloomberg, which tracks Model 3 production, reported Wednesday a production rate of 2,560 cars a week, and a total of 34,414 manufactured so far.

We build cars with love. We pour our heart and soul in the product. We really care. Elon Musk


To fulfill his big ambitions for Tesla, Musk well knows, will require billions more in cash, whether from investors or from automobile profits.

But Musk made the kind of bold claims for new products and investments that drive some Wall Street analysts crazy. He resketched plans to build an electric crossover car he calls the Model Y in 2020. He said Tesla would begin producing an electric semi truck around the same time. He teased shareholders about a new manufacturing plant in China, telling them to expect an announcement by the end of July.

And he let drop plans for “SpaceX options” to be offered on the still-in-development Roadster high-speed sports car — which was sprung as a surprise at an event last November — without explaining what those options might be, beyond borrowing the name of his rocket company.

Those efforts — not to mention grand plans for solar roofs and banks of utility-scale storage batteries — necessitate several billion dollars over the next two years. So far, Tesla’s 14-year-old car business has provided no profit to fund future growth. All of Tesla’s ventures have been funded by the capital markets.


Earlier in the year, Musk said Tesla won’t need to raise more money this year. Tuesday he added a detail, saying Tesla won’t need to raise “incremental” equity or debt in 2018. But he didn’t explain what he means by “incremental.” Would a rollover of existing debt not count as incremental? A corporate recapitalization that restructured finances without raising existing levels of equity or debt?

A Tesla spokesman said “there’s nothing changed or different from what we’ve said publicly on this before,” but declined to discuss what Musk meant by the word.

On profits, Musk said it’s “really looking like” Tesla will register positive net income for the third and fourth quarters, and positive cash flow too. That would be quite a turnaround from the first quarter, when Tesla burned through more than $1 billion, and Levy, for one, is skeptical.

“I still don’t see that as realistic at this point,” the analyst said — though he noted that by using legitimate techniques such as lumping electric vehicle credits into one quarter the company could achieve a one-off profitable period. Tesla used such an approach when it last posted a quarterly profit in October 2016.


In any case, Levy thinks Tesla will have no problem raising new money. The sooner Musk can get Model 3 production up to high volume and keep it there, the easier it will be to get debt and equity investors to strike a deal.

Short sellers — investors who bet a company’s stock will plunge — say a failed Model 3 will drive the stock price toward zero, and scotch big growth plans.

Plenty of current stockholders disagree. The company’s shares are rising again, after plunging in March, and its market value of about $54 billion puts it higher than Ford’s.

russ.mitchell@latimes.com


Twitter: @russ1mitchell