Tesla volumes are up, but the maker continues to post substantial losses for each Model S.

During a conference call following the announcement of Tesla Motors’ disappointing second-quarter financial results, CEO Elon Musk suggested the Silicon Valley firm might need to raise more capital. That’s all the more likely, it appears, if the company continues to burn through cash building its money-losing Model S.

Despite winning generally rave reviews for the sedan, it appears the maker is losing at least $4,000 on every one of the electric vehicles it sells, according to a study by the Reuters News Service. And that, along with the hefty development costs for Tesla’s second product line, the Model X SUV, left it with barely $1.15 billion in cash at the end of June, about a 57% year-over-year decline.

And with Tesla forecasting it will short of earlier sales goals for all of 2015, the situation isn’t likely to improve anytime soon – one reason the maker’s stock has been in the doldrums since the maker revealed its Q2 numbers.

“The only way for us to feel good about the future is to exceed high expectations” for the company, Musk said during the call. For the moment, however, that isn’t the case.

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The company’s financial woes are all the more disconcerting considering Tesla appears to be struggling at a time when much of the rest of the industry, particularly Detroit’s Big Three makers, are bringing in billions after nearly a decade of economic struggles.

On the other hand, backers caution that Tesla isn’t any ordinary auto company. It is in the midst of putting in place a significantly different business model, one that relies solely on battery power and a network of company-owned stores rather than the traditional franchised distribution network.

CEO Musk: Tesla needs to exceed expectations.

And though sales for the year are expected to run only between 50,000 and 55,000 – barely 0.5% of General Motors’ global total – it has been growing the numbers at a time when the overall electric vehicle market has been shrinking in the face of declining gasoline prices.

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The real test, Tesla stresses, will come with the launch of the Model X in the coming months. If Tesla hits its target, that would boost production volumes closer to 90,000 next year. And with the planned addition of the more mainstream Model III later in the decade, Tesla promises to build demand to as much as 500,000 electric vehicles annually.

But it will have a hard time getting there if it continues losing $4,000 a vehicle.

Of course, most makers would lose money when they’re operating well below capacity, as is the case at Tesla’s big Fremont, California factory – which had previously been operated as a joint venture between GM and Toyota.

That is far from certain. The old business joke is that, “We’re losing money on every one. But we make it up in volume.” But will volume alone help?

It could help to put the hefty development costs associated with the Model X in the rearview mirror. Tesla says it expects $1.5 billion in capital spending this year, and has already gone through $831 million. Musk noted that the development of the Model X has been far more “challenging” than originally anticipated, and added that the SUV will share fewer parts than first projected with the Model S sedan. That could reduce potential profits, meanwhile.

If anything, Barclay’s analyst Brian Johnson is cautious about future spending and cash reserves, warning, “Their small scale means the cash generation is not as great as they might have hoped for.”

Separately, Tesla is preparing to add a second business line with the upcoming launch of the maker’s back-up power technology. Musk claims it has already received initial indications of orders reaching into the billions of dollars, but he acknowledged those are not yet formal orders.

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