Tesla's Musk 'sees merit' in capital raise, vows profit in Q3 after large loss. Musk is still battling to convince investors that demand for the Model 3, the sedan hoped to propel Tesla to sustainable profit, is "insanely" high, and that it can be delivered efficiently and swiftly to customers around the world. Tesla's results came two days after the company hosted a self-driving event, in which Musk predicted Tesla would have over a million autonomous vehicles by next year. Some analysts perceived the presentation as a way to deflect attention from questions about demand, margin pressure, increasing competition and even Musk's ongoing battle with U.S. regulators. Musk said that Tesla would change the costly and inefficient way it was building cars, in which it produced for international markets at the start of each quarter - to leave time for longer transport - then built for North America later.
Daniel Sparks, The Motley FoolMotley FoolApril 25, 2019, 12:01 AM GMT. Lower-than-expected first-quarter vehicle deliveries announced earlier this month sparked concerns about the company's ability to continue ramping up production and meet a year-end target for total deliveries to increase 45% to 65% year over year. But Tesla management shrugged off these concerns in its first-quarter update, reiterating its ambitious guidance. Higher overall deliveries helped revenue climb 33% year over year. But $188 million worth of non-recurring items that negatively affected Tesla's profitability, lower Model S and X deliveries, and about 11,000 vehicles in transit to customers at the end of the quarter weighed on profitability. In its fourth-quarter shareholder letter, Tesla said lower Model S and X deliveries were mainly due to "to seasonality, pull-forward of sales into Q4 2018 in the U.S. due to the first scheduled reduction of the federal EV [electric vehicle] tax credit in Q1, and discontinuation of our 75 kWh battery pack."
Tesla CFO Zach Kirkhorn braced investors for another quarter in the red during the company's first quarter earnings call on Wednesday. CEO Elon Musk and President of Automotive Jerome Guillen talked up its progress and plans to improve logistics, build a new battery and car plant in Shanghai, and start production of a crossover SUV, the Model Y, later this year. "Given that you used up about $2 billion of cash in a quarter, aren't you potentially trying to go through a very thin space while trying to grow quickly, and be self-funding, which quite frankly, may be unrealistic? "Tesla today is a far more efficiently operating organization than it was a year ago, we have made dramatic improvements across the board ,and so I think there is merit to the idea of raising capital at this point," Musk said.
Tesla Inc. will continue to have stores and even add stores, provided such stores have "high foot traffic," Chief Executive Elon Musk said in a call with analysts after Tesla reported first-quarter results late Wednesday. Conversely, it will close stores that have low foot traffic, he said. Customers will still order vehicles online, and stores will be "essentially information centers," where people would buy Tesla merchandise, test-drive cars, and get more information about the vehicles, Musk said.
Wall Street was already bracing for what one analyst called an "apocalyptic" results — but the results were still far worse than expected. While the company has posted big losses of this size before, analysts surveyed by Refinitiv predicted that Tesla(TSLA) would be about $301 million in the red for the quarter. Tesla stock dipped slightly after earnings were released, but later edged back to even. CEO Elon Musk said during a conference call with investors that last quarter may have been rough, but Tesla has a rosy outlook. The company already revealed earlier this month that it delivered about 63,000 vehicles to customers in the first three months of 2019 — a 31% drop compared to the prior quarter, and the single largest decline Tesla has ever reported.
Tesla Inc. could return to profits by the third quarter, Chief Financial Officer Zachary Kirkhorn said in a call with analysts Wednesday. Tesla made price adjustments in its vehicles in the first quarter, which put pressure on margins, which will still be seen in the second quarter, he said. Tesla is "working extremely hard and making terrific progress on improving the cost efficiency of the business without sacrificing growth," he said. Chief Executive Elon Musk said last month Tesla was likely to return to profits in the second quarter.
Tesla Inc. Chief Executive Elon Musk said the company is still undecided on where to build the Model Y. It could build the compact SUV, unveiled earlier this year, at its Fremont, Calif. factory or at its battery factory outside of Reno, Nev., Musk said. It will be a "tough call" between those two states, and Tesla expects to reach a final decision very soon. In the meantime, all tooling and equipment for the Model Y are being ordered and the question of where to build it is not expected to delay production.