Tesla lost $700 million in the first quarter with Model 3 problems


Tesla reported a massive loss in the first quarter of 2019 as it struggled to deliver its mass-market Model 3 and faced challenges including a diminished federal tax credit and slowing demand for its vehicles.


The $702 million loss was higher than analysts forecast for the company, slightly less than the figure reported in the same quarter one year ago and a stark departure from two straight quarters of profits. Its $3.7 billion in automotive revenue was $1 billion more than the year-ago figure, on the heels of the release of Tesla’s Model 3, but down 41 percent from what Tesla reported in the fourth quarter. Overall revenue, which includes energy products, was $4.5 billion.

For the first couple of years after Tesla began making its Model 3, the car that is supposed to bring electric vehicles to the masses, it faced production problems that hampered its ability to make enough cars. Now that Tesla seems to have overcome that, it is facing more difficulties delivering cars to customers, and therefore, being able to book a sale.

“This was the most difficult logistics problem I have ever seen, and I have seen some tough ones,” Tesla CEO Elon Musk said on an analyst call.

Reflecting on Tesla’s financial position in the wake of the challenges, Musk said it would be “healthy to be on a spartan diet for a while.”

He said “at this point I do think there is some merit to raising capital," after dismissing the idea last year.

The figures were a troubling sign for investors in a year when Tesla has staked its future on the Model 3, expanding sales to China and Europe and shifting the vast majority of its sales and production from the flagship Model S and Model X SUV to a new model aimed at a wider market of consumers. Tesla is also facing criticism for failing to reliably deliver on its long-promised $35,000 Model 3, production and delivery challenges, and legal battles. Tesla announced cuts to about 7 percent of its workforce in January, and Musk is mired in an ongoing legal battle with the Securities and Exchange Commission over his tweets. Tesla reported $67 million in restructuring and related charges.


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