Within the first three months of 2019, Tesla has reported losses of $702 million. Two major reasons cited for the same are inconsistent car deliveries and reduction in US Tax credit. The latter was responsible for keeping the prices of the EVs made by Tesla competitive. Tesla, which is a California based company, manufactured a total of 63,000 units of the Model 3 sedan. Though the number marks an increase of 3% over last year's production, it is still lower than was anticipated. The electric vehicle manufacturer attributes the losses suffered due to the delays it has experienced in the shipping of Model 3 units to Europe and China.
In the said period, Tesla's overall revenue increased by 33% and stood at $4.5 billion. That said, it is still lower than what was predicted by Wall Street forecasts. The company's shares that finished the formal trading day down nearly 2% to $258.66 were essentially flat in after-market trades that followed the release of the earnings figures. Carmaker's recent changes in its strategies to retail its vehicles and alterations made to the prices were the main reasons behind the losses that it incurred.
In February this year, Tesla announced that its electric vehicle for the masses i.e. the Model 3 is only going to retail through its online platform at a price of $35,000. And the deliveries were promised within a month. A month after that, the company announced that it is going to keep its showrooms open, however, it will have to increase the prices in order to do so. In April, the carmaker stopped retailing the base variant of the Model 3 through its online platform, making the $39,500 Standard Plus variant as the entry-level offering for online customers.
Another challenge to vehicle demand has been the the lowering of a US tax credit on Tesla vehicles to $3,500 from $7,500.
Jessica Caldwell, Edmunds.com executive director of industry analysis, said there were "many signals that the brand is running out of steam." Edmunds research indicated that most of the vehicles Tesla made in the first quarter were shipped overseas, suggesting US demand was softening, according to Caldwell. Nonetheless, Tesla was confident it would get past the financial speed-bumps and into a smoother road to improved fortune. Musk contended that demand for Tesla vehicles is solid and vehicle production numbers would increase in the current quarter.
Tesla vowed to significantly reduce losses this quarter and aimed to return to profit in the following three months.
The company expected to remain on course to deliver between 360,000 and 400,000 vehicles in total this year, topping 2018 numbers by at least 45%. "If our Gigafactory Shanghai is able to reach volume production early in Q4 this year, we may be able to produce as many as 500,000 vehicles globally in 2019," Musk and freshly-installed chief financial officer Zachary Kirkhorn said in a letter to investors. "This is an aggressive schedule, but it is what we are targeting."