Despite $408 million loss, Tesla plans to make it up in volume

by Atiya
July 24, 2019

Despite being EVs, the Tesla Model S and Model X have stalled in the sales department this year.

In 2018, the Model 3 set the bar high; achieving status as the best-selling EV in the world in, with 250,000 vehicles sold that year alone.

Moving forward to this year, Tesla made and delivered more cars in 2019’s second quarter than any other quarter in company history; generating $6.3 billion in revenue.  Thanks to a $2.7 billion capital raise in May, Tesla managed to finish the quarter with $5 billion. cash

On the flip side, the company still lost $408 million during this period, on top of the $702 million loss in the first quarter.  The company’s stock also dropped more than $150 between January and June.  But what’s causing the huge losses?

Responsible for $117 million are restructuring charges related to layoffs and store closings.  Additionally, their overall margins for automotive products dropped from 20.2% to 18.9% in the first quarter.  Despite being recently updated with technology from the Model 3, the lack of sales of the Model S and Model X are largely caused this.

The EVs have also been made less affordable for North Americans, with the vehicles losing eligibility for the upcoming $7,500 federal EV tax credit.  Buyers can now only get $1,875 from the federal government until the credit is fully cut off in 2020.

Desperate to return to profitability, Musk introduced drastic cost-cutting measures.  7% of the company’s workforce was let go, and he even considered closing most of the Tesla stores.

In spite of the rough start, Musk remained optimistic that deliveries in Europe and China will be enough to set a record for deliveries in the second quarter.

Thankfully, the goal was achieved, and Tesla managed to beat its own records for quarterly production and deliveries.

Thriving in the face of adversity, Tesla plans to compensate for the slow start to the year by delivering between 360,000 and 400,000 cars across 2019.

On top of this, their third Gigafactory will be located in China, so Tesla may be able to swerve around existing import taxes for the Model 3 by producing cars locally.

Hopefully we’ll see Tesla crush their delivery goal, and finish the year strong and profitable.

Source: theverge

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