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Tesla (TSLA) Delivers More Losses In Spite of the Record Deliveries

Tesla (TSLA) reported bigger-than-expected loss of $408 million, or $2.31 per share for the second quarter. They managed to generate only $6.3 billion in revenue in spite of the record deliveries of its electric vehicles.

Earlier this month, Tesla reported it delivered 95,200 of its electric vehicles in the second quarter, what seems to be a big surge from a disappointing first quarter. Those numbers have been since adjusted to 95,356 vehicles. Even though TSLA stock plunged more than 10%, at the time of writing, Tesla shares were recovering by 1.81% to $264.88.

Chief Executive Elon Musk said that the company expects to only reach break-even in the current quarter and predicted a return to profit for the year’s final three months. In his letter to shareholders, Musk said that “continuous volume growth, capacity expansion, and cash generation will remain the main focus.”

He added that Tesla was “most focused on expanding our manufacturing footprint in new regions, launching new products and continuing to improve the customer experience while generating and using cash sustainably.”

Musk also repeated what he said earlier, that Tesla would deliver 360,000 to 400,000 vehicles this year. He said:

“We are working to increase our deliveries sequentially and annually, with some expected fluctuations from seasonality. This is consistent with our previous guidance of 360,000 to 400,000 vehicle deliveries this year.”

Sales of Tesla’s older vehicles, the Model S large sedan and Model X sport-utility vehicle, fell 21% in the second quarter.

Deliveries of the Model 3 in the second quarter soared to about 78,000 cars from 18,400 a year ago, helping Tesla boost total revenue to $6.35 billion during the period from $4 billion last year. Analysts had expected revenue of $6.47 billion.

Musk claims that there may be a false expectation in the market that there’s big overhaul coming for S and X which then could cause people to hesitate to buy if they think there’s a radical redesign coming, which is why he emphasized publicly that this is not the case. He said:

“The Model S and X today are radically better than the ones that when we first started production, especially the S. Like, a 2013 or 2012 Model S, compared to today’s Model S — it’s night and day.”

He added that the company already started the preparations required to get production started on its forthcoming Model Y compact all-electric SUV noting that prep had started at its facility in Fremont, Nevada.

Model 3 production, on the other hand, is on track to begin at its Shanghai factory by the end of the year what will be a critical milestone for the automaker if it hopes to continue to increase sales and avoid the high cost of shipping and tariffs.

Alyssa Altman, a transportation lead at the digital consultancy Publicis Sapient explained that Tesla struggles to fulfill its ambitious goals and promises on a long-term basis, and stumbles at logistical impediments despite huge advances in technology that keep consumers and investors interested. She said:

“To avoid a total car crash of the business in the next few years, Tesla needs to refocus its efforts from maintaining the appearance of a profitable and sustainable business model to actually delivering one.”

Also, after the revealing of the results, it was also announced from the company that JB Straubel, the CTO, will be replaced by the vice-president of technology, Drew Baglino. Straubel said:

“This has nothing to do with lack of confidence for the company. I will be helping as I can, just no longer in an executive role.”

Tesla (TSLA) Delivers More Losses In Spite of the Record Deliveries

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