Tesla Reports Q1 Loss of $702 Million, CEO Elon Musk Says the Company Will Return to Profit in Q3
【Summary】Tesla CEO Elon Musk got a dose of reality as the electric automaker announced its 2019 first quarter earnings. The electric automaker posted a $702 million dollar loss or $4.10 per share amid slowing demand for the Model 3 and difficulties delivering the company’s first mass-market car to customers.
Tesla CEO Elon Musk got a dose of reality as the electric automaker announced its 2019 first quarter earnings. The electric automaker posted a $702 million dollar loss or $4.10 per share amid slowing demand for the Model 3 and difficulties delivering the company's first mass-market car to customers.
Tesla reported net loss attributable to common shareholders of $702.1 million in the first quarter ending March 31, compared with $709.6 million, or $4.19 per share, a year ago.
The company reported Wednesday that automotive revenue in the first quarter fell by 41%, to $3.7 billion from $6.3 billion in the previous quarter, a much higher drop than expected for sales for all three of its electric models—the Model S, the Model X and the Model 3.
Shares of Tesla fell by 20% this year. Tesla shares fell by nearly 5% on Wednesday to close at $258.66.
Tesla managed to boost production of the Model 3 in the first quarter but delivered 20% fewer than the previous quarter. Sales of the more expensive Model S and X deliveries dropped by 56% on falling demand.
Tesla has looked for ways to cut expenses and increase profitability in Q1. The company unveiled its Model Y crossover in early March just days after announcing it would close its retail stores and move sales to online only, only to backtrack on that decision. Tesla's retail employees were blindsided by the announcement and many claimed they were laid off without notice.
Musk said shortly afterwards that he will keep many retail locations open, but moved sales of the $35,000 base Model 3 to online only, removing the purchase option from its website.
The Model Y unveil in early March was for the most part lackluster. The Model Y was dismissed by many as just a more expensive Model 3 and by Tesla fans hoping the Model Y would be more of a unique vehicle. The two models will reportedly share around 70% of their parts.
Tesla said on Wednesday it would return to profit in the third quarter of 2019 after racking up two consecutive losses in the first half of the year. Tesla is also burning through its cash reserves.
Musk assured investors that higher deliveries and cost cuts will help Tesla post a narrower loss in the second quarter and return to profitability the following three months. But he hinted earlier this week that Tesla may seek more funds as he embarks on a hugely ambitious pursuit to unleash fully autonomous robotaxis in a shared service next year, Bloomberg reported.
Tesla ended the quarter with just $2.2 billion in cash, after paying off a $920 million convertible bond obligation in March. The company has another $566 million of convertible bond obligations due in November.
Tesla, however, affirmed its outlook of delivering 360,000 to 400,000 vehicles in 2019 and said it may produce as many as 500,000 vehicles in the year if its Gigafactory in Shanghai reaches volume production in the fourth quarter. Musk as usual, remains optimistic about returning to profitability later this year.
"As the impact of higher deliveries and cost reduction take full effect, we expect to return to profitability in Q3 and significantly reduce our loss in Q2," Chief Executive Officer Elon Musk said in a letter to investors.
Tesla is also facing growing competition from global automakers releasing their own fully-electric models later this year to compete with Tesla. Among the most anticipated electric offerings are the Audi e-tron SUV, Mercedes Benz EQC and Porsche Taycan.
resource from: Reuters
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