Tesla's record net loss in the first quarter and fast-burn through cash is raising questions about the company's future and whether it will be able to pay all of its bills.

Wednesday's results showed Tesla tearing through $US745.3 million in cash in the first quarter, which may put pressure on it to borrow more money or sell additional shares to raise additional cash.

Tesla struggled to produce the mass-market Model 3 electric car during the quarter, falling short of production estimates. Strong sales of the car are key to generating cash to pay operating expenses, fund capital spending and make upcoming debt payments.

Production problems have been so bad that CEO Elon Musk has tweeted he's sleeping at the plant and that automation is overrated and more humans are needed to build the cars.

In April, Tesla said it wouldn't need to return to markets for more capital because it expected to generate cash from sales of the Model 3. But it has had trouble getting them out the door to several hundred thousand people who put down $US1000 deposits to order one.

The company said in a note to investors on Wednesday that Model 3 production is on the rise and it expects to post at least positive net income excluding stock-based compensation, and positive cash flow in the third and fourth quarters.

It also expects full profitability in those quarters under generally accepted accounting principles.

"This is primarily based on our ability to reach Model 3 production volume of 5000 units per week," the company stated.

The company said it now expects to hit 5000 Model 3s per week, or 20,000 per month, by around early July.

Tesla admitted it made a mistake by adding too much automation too quickly at the factory in Fremont, California.

"We have temporarily dialled back automation and introduced certain semi-automated or manual processes while we work to eventually have full automation take back over," the company said.

Tesla posted a record $US709.6 million net loss in the first quarter, which amounts to a loss of $US4.19 per share. Excluding one-time expenses such as stock-based compensation, the company lost $US3.35 per share. Revenue grew by 26 per cent from a year ago to $US3.4 billion.

The giant loss in a critical quarter for the 15-year-old company beat Wall Street estimates. Analysts polled by FactSet expected an adjusted loss of $US3.54 per share. Revenue exceeded estimates of $US3.28 billion.

Moody's Investor Service downgraded Tesla's debt into junk territory back in March, warning at the time that Tesla didn't have cash to cover $US3.7 billion for normal operations, capital expenses and debt that come due early next year. At the end of last year the company had a total of $US9.5 billion in long-term debt.

"The negative outlook reflects the likelihood that Tesla will have to undertake a large, near-term capital raise in order to refund maturing obligations and avoid a liquidity shortfall," Moody's wrote in a note to investors.

The company said it will reduce capital spending for 2018 from $US3.4 billion to $US3 billion.

The Model 3 starts at $US35,000 but can easily top $US50,000 with options.