Automotive

Tesla rounds out a record quarter for deliveries with a $408 million loss

Tesla rounds out a record quar...
Tesla delivered a record number of vehicles in the second quarter of 2019
Tesla delivered a record number of vehicles in the second quarter of 2019
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Tesla's Model 3 is pivotal to its plans
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Tesla's Model 3 is pivotal to its plans
Tesla delivered a record number of vehicles in the second quarter of 2019
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Tesla delivered a record number of vehicles in the second quarter of 2019
Tesla says production costs of the Model 3 continue to decline
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Tesla says production costs of the Model 3 continue to decline
Tesla CEO Elon Musk at the launch of the Gigafactory in China earlier this year
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Tesla CEO Elon Musk at the launch of the Gigafactory in China earlier this year
Tesla's Model 3 is pivotal to its plans
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Tesla's Model 3 is pivotal to its plans

Things were looking rather rosy for Tesla at the beginning of year, at least in terms of its bottom line, with the company entering 2019 on the back of consecutive profitable quarters. It's a machine with a lot of moving parts, but the company has come up short in its latest earnings report, posting a loss of US$408 million despite delivering a record amount of vehicles in the same quarter.

It was always going to be an eventful, up-and-down sort of year for Tesla, with its impressive financial results early on foreshadowing big expansions into Europe and China, where work continues on a shiny new Gigafactory. Around the same time it waved goodbye to its CFO, contended with tumbling stock prices and prepared to pay off significant debts.

Its delivery of 95,200 cars in the second quarter was a record for the company and a huge increase on the 53,339 it delivered in the same quarter of 2018. But all that production and logistics comes at a cost, and one that the $$6.35 billion it generated in revenue for the quarter couldn't quite cover.

The loss of $408 million is obviously not ideal for a company targeting sustainable profitability, but is an improvement on the massive $702 million that it shed in quarter one.

It is no secret that the Model 3 offers the company far narrower profit margins than its higher-end models, which were its primary offerings up until the launch of the mass-market sedan in 2016. Of the 95,200 cars it shipped in the second quarter, 77,500 were Model 3 sedans.

Tesla CEO Elon Musk at the launch of the Gigafactory in China earlier this year
Tesla CEO Elon Musk at the launch of the Gigafactory in China earlier this year

CEO Elon Musk has said previously that shipping the Model 3 too early would cause "Tesla to lose money and die." Though it has side-stepped that bullet for now, it is clear that shifting its focus to the mass-market vehicle is posing some real challenges.

In any case, Tesla says in its latest earnings report that manufacturing costs for the Model 3 continue to decline and it is now producing 7,000 of them a week at its factory in Fremont, California. It hopes to deliver up to 400,000 total vehicles across all of 2019, and says it is will placed to start producing the Model 3 at its Shanghai Gigafactory by year's end, and then its Model Y crossover in Fremont by fall (local) of 2020.

Source: Tesla

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