Tesla loses money again as deliveries decrease
2019 has been rocky for electric-automated Tesla: It announced that it would start rolling out Model 3 sedans priced at $ 35,000, and made it harder to order them. It said it would close all its showrooms, then said it would keep someone open and raise the prices to compensate. Chief Executive Officer Elon Musk predicted that 1 million of his fully-driving robot taxis would roam the country next year, even though it has not yet completed its autonomous technology. And Musk continued to talk to the US Securities and Exchange Commission over his Twitter habit.
The runway continues: On Wednesday, Tesla said it had beaten its quarter of the profits by entering a $ 702 million loss for the first quarter in the midst of delivery and logistical woes. The loss was worse than Wall Street chin strokers expected, equivalent to $ 2.90 per share, compared to a 69 percent loss.
As the company continues to paint the production and Musk makes bold claims about autonomous vehicles, the figures show that driving a car company sometimes comes down to basics, such as getting the vehicles into people's garages.
The report also gave a fluctuating question: Can Tesla make enough money to survive as an "affordable" electric company, a focused on selling model 3s instead of luxury, higher-margin model S and X vehicles? Now that buyers have the opportunity to buy a more affordable car, Musk will never sell as many of the higher and higher profits as he used to sell, says Karl Brauer, car research publication publisher Kelley Blue Bok. "Now Tesla lives and dies on model 3."
Tesla, for its part, says that it does not believe that Model 3 is the cannibalizing sale of its luxury cars. "They really seem to be different market segments," Musk said on the call.
Tesla attached the quarterly loss, the largest since last summer, to a few factors, especially the challenges of delivering cars abroad. Tesla delivered only 63,000 cars in the first quarter, down 31[ads1] percent from the fourth quarter of 2018, and only 12,100 luxury S and X models, almost half from the fourth quarter. Getting cars to customers in China and Europe "was the most difficult logistics problem I've ever seen, and I've seen some tough," said Musk investors on a conversation. He mentioned what the company reported earlier this month: Half of the quarterly delivery came in the last 10 days of the quarter, creating a crunch that proved uncomfortable for both employees and customers. The company will work to reassess and deliver its delivery strategies throughout the quarter, says Musk, but he did not recommend the shareholders to expect another profit until the second half of the year.
A future factory in Shanghai can also help Tesla out abroad, and will give it a solid foothold in a protectionist country that is serious in electric vehicles. Musk reported that the construction "goes really well" and said he expects to reach volume production in Shanghai by the end of the year. Musk has previously said that Tesla is looking at establishing a collection factory in Europe.
The company also said that the sale suffered from the planned and gradual phasing out of the federal electric vehicle credit – a problem for a car manufacturer intending to sell its electricity to the masses. In January, potential Tesla buyers saw the original $ 7,500 credit cut in half to $ 3,750, a move the company has proposed to motivated buyers to buy cars in the last quarter of 2018. But the credit will only fall further in the coming months, to $ 1,875 in July and null in 2020.
Tesla said the compact SUV, model Y, is still slated for production by 2020. Musk said Tesla had begun ordering the equipment needed to build the vehicle, although it is not yet determined It will make model Y in its Fremont, California, factory or on Gigafactory in Reno, Nevada.
Musk raises questions about slackening demand for company cars, raised by frequent price changes and repackaging in the last quarter. "We see a strong demand for the vehicles," says Musk, and calls $ 39,500 Model 3 Standard Plus "an incredibly compelling vehicle, affordable for the 40 percent of revenue in the US and Europe." (The car now comes with the company's semi-automated Autopilot feature by default.)
The Tesla stock fell just after the aftermarket deal, with 0.3 percent Wednesday night, suggesting investors were prepared for the bad news. In fact, the company's stock had taken a bigger hit earlier in the day when Detroit's gigantic Ford announced it would invest $ 500 million in the start-up of the electric car Rivian – a small but growing Tesla rival that has promised two 400 miles range, fully electric cars within end of next year. Ford said it would work with Rivian to develop a new EV. As a hint at another challenge for Tesla on the horizon, partly born of its own success: Soon the best-selling electric vehicle in the world will have much more competition.
