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Musk said he expects the company to achieve sustained quarterly net profits from now on, barring an unforeseen event, supplier problems or economic downturn. In his crosshairs is hedge fund manager David Einhorn, who said his wrong bet that Tesla stock would fall was a big reason for his fund's poor performance in the second quarter.

Investors responded very positively: Tesla shares surged as much as 12 per cent in after-hours trading. CEO Musk is under particular scrutiny after his comments during a May earnings call in which he rebuked analysts for asking "boring, bonehead" questions. While construction is expected to start in the next few quarters, Tesla's investment won't begin "in any significant way" until next year, according to the shareholder letter.

The company said it produced 53,339 vehicles in the second quarter and delivered 18,449 Model 3s. Adjusted for stock-based compensation, the company lost $US3.06 per share.

Wednesday's earnings report also comes as Musk has faced scrutiny for recent erratic behavior.

Free cash flow, a key metric of financial health, narrowed to negative $740 million in the second quarter from negative $1 billion in the first quarter, excluding solar business costs.

On the call, Mr Musk also said he expected the company to avoid returning to the markets for capital and to be "essentially self-funding on a go-forward basis". Tesla says it's on track to produce 100,000 Model S and X cars this year.

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While Tesla so far has been mostly losing money at a growing pace, Musk reiterated on Wednesday he expects the company to become profitable as soon as the next quarter after it boosts production of its Model 3 vehicle, envisioned for mass marketing.

"We like the more muted tone of the company's outlook, with the absence of unnecessary new stretch goals", CFRA analyst Efraim Levy wrote in a note to clients. Last quarter, the company reported about $3.4 billion in total revenue (automotive and energy combined) and a non-GAAP share loss of $3.35 per share.

Bannon said that when he joined Tesla, employees considered many options, including Nvidia graphics cards, and said they talked with people at Arm, whose technology is used in chips from Qualcomm (QCOM) and other companies. Investors on Wall Street, meanwhile, were anticipating revenue to fall somewhere in the $3.791 billion range and a loss of $2.90 per share.

During the second quarter, Tesla laid off 9 percent of its workforce as it worked toward Musk's promise of making money.

Tesla also faces broader challenges that could make its cars more hard to sell.


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