Tesla’s surprisingly weak car deliveries in the first quarter took a heavy toll on its bottom line.
The company on Wednesday said it lost $702 million in the first quarter, a sharp reversal from the profits it made in the second half of last year. The loss, equivalent to $4.10 per share, was far greater than the $1.81-per-share loss that Wall Street analysts, surveyed by FactSet, had been expecting. Tesla’s first-quarter revenue of $4.54 billion fell well short of expectations.
Tesla’s had $2.2 billion of cash at the end of the first quarter, a 40 percent decline from the figure at the end of last year. The company spent $920 million paying off a bond in March. Tesla’s operations consumed $640 million of cash in the first quarter.
Investors had been bracing for the red ink after Tesla said that it sold 31 percent fewer vehicles in the first quarter than in the fourth quarter of 2018. The company said logistical challenges had hindered its deliveries of the Model 3 sedan to Europe and China. The reduction in the size of an federal electric car tax benefit may have weighed on Model 3 sales in the United States.
After the anemic delivery numbers, Tesla and its chief executive, Elon Musk, once again face doubts that the company can achieve its goals and meet Wall Street’s financial targets. Tesla’s stock, down over 30 percent from its most recent high at Wednesday’s close, was little changed in extended trading. Analysts in recent weeks had slashed their earnings forecasts.
Tesla said Wednesday that it expected to deliver between 90,000 and 100,000 cars in the second quarter, up from 63,000 in the first three months of the year. It said it would lose money again in the second quarter, though less than in the first quarter, and would turn a profit in the third quarter.
Tesla’s weak first quarter comes after months of upheaval involving Mr. Musk.
Last summer, he said in a Twitter post that he had “funding secured” for a buyout of Tesla at $420 per share. The Securities and Exchange Commission later charged Mr. Musk with securities fraud for what it called “false and misleading” tweets. The commission and Mr. Musk reached a settlement, but the agency later asked a federal judge to hold Mr. Musk in contempt of court for violating the agreement with another Twitter post. The judge told the two sides to work out a resolution, which is due on Thursday.
Tesla’s supporters are hoping that Model 3 sales will surge and enable the company to meet its target of delivering 360,000 to 400,000 vehicles this year. Tesla on Wednesday affirmed that goal, but the company said its vehicle production would be “significantly higher than deliveries,” because of the time it takes to transport cars from California to other countries.
The company next month plans to start selling a $35,000 version of Model 3. The lower price may stir up demand for car, but charging less could make it harder for Tesla to make a profit on the vehicle.
Tesla’s cash position is crucial to the company’s future. Mr. Musk intends to produce new vehicles in volume, including a large truck called the Semi, but setting up the new production facilities would consume large amounts of cash. Many analysts expect that Tesla will have to issue new shares to raise money
Mr. Musk, who had previously said the company did not need more capital, indicated Wednesday that he had changed his mind because Tesla was now in a position to use capital more efficiently. “There is merit to the idea of raising capital at this point,” he told analysts on a call.
Tesla on Monday outlined a plan to produce and operate a fleet of driverless taxis, but analysts said the company was getting ahead of itself. During an event to discuss the plan, Mr. Musk indicated that building the fleet would use up significant amounts of cash. He said Tesla was aiming to be “cash flow neutral” during the fleet’s buildup, and then “cash flow positive” once it is active.
The company last week said four of its board members would not stand for re-election. The departures aim to allow the board to “operate more nimbly and efficiently,” Tesla said in a securities filing.