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Tesla posts a record quarterly loss

Tesla posted a NZ$895.9m loss in the third quarter as it spent heavily to make up for production bottlenecks to bring in its more affordable Model 3 sedan to market.

Tesla said the bottlenecks in the production of the Model 3 sedan stemmed from its battery module assembly line at its Nevada Gigafactory, where Tesla had to redesign part of the production process.

This has caused a loss of US$3.70 per share, a far bigger decline than what Wall Street had predicted. Analysts polled by FactSet forecasted a loss of US$2.85 per share.

The affordable US$35,000 Model 3 would move Tesla from a luxury automaker into the mainstream. 

Tesla chief executive Elon Musk promised that the Model 3, which has a waitlist of 500,000 potential buyers, would be simpler to make than Tesla’s previous vehicles. However the company produced only 220 Model 3s in the third quarter, far fewer than the 1,500 Musk promised.

And while some customers may be annoyed by the delays, they’re not necessarily losing faith in Tesla.

“It is disappointing, but I would rather that Tesla make the car correctly and to an optimal finish than rush and turn out a disappointing product,” said Lisa Gingerich, who reserved a Model 3 within minutes.

 

Tesla had other major expenses in the quarter. The company opened 18 stores and service stations worldwide and set up 126 Supercharger stations in preparation for the increase in demand for Model 3 vehicles.

Sales of Tesla’s two other vehicles, the Model S sedan and Model X SUV, increased by 4.5 per cent to 25,915. Tesla said net orders for those vehicles hit a record level in the third quarter, setting the stage for record deliveries in the fourth quarter.

The company says it’s on track to deliver 100,000 Model S and Model X vehicles in 2017, up 30 per cent from 2016.

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Industry mourns loss of McMillan

Auto industry icon Bob McMillan has died after a battle with cancer.

The 74-year-old, who died at home yesterday, was a dealer his entire working life apart from two years after he left school when he was a public accountant. After 52 years in the industry, McMillan retired in 2014, after selling his 50 per cent share of Team McMillan BMW to its co-owner Collins Asset Management.

His initiation into the industry started as a teenager who saw an opportunity to make some money selling second-hand Minis with a friend.

McMillan’s first role was at John Andrew Ford, before he left to work at a Ford dealership in eastern Sydney. He returned to New Zealand and became a sub-dealer for John Andrew Ford in 1970. Ford NZ told him he was too young to be a dealer but could become a sub-dealer. For every new vehicle he sold, he had to pay John Andrew Ford one per cent, which he did reluctantly. After about 18 months, he became a full dealer and developed Team McMillan Ford in Greenlane.

By the mid-80s, Team McMillan had about 180 staff and sold about 3,000 cars and trucks a year, while McMillan chaired Ford’s dealer council in New Zealand for three terms.

He took over the original BMW dealership in 1985, which grew to become New Zealand’s largest BMW dealership.

He added to the dealership’s portfolio with a brand manager and sales team dedicated to Mini. Team McMillan also took on Rolls-Royce in New Zealand. At age 72, he decided the time was right to retire.

McMillan is survived by wife Kerry and children Anna, Scott and Andrew.

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