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Tesla Made Record Deliveries In Q2 Of 2019 But Still Made A Loss


07/25/2019


Tesla Made Record Deliveries In Q2 Of 2019 But Still Made A Loss
A recent filing with the United States the Securities and Exchange Commission by the US electric car maker Tesla has shown that the company lost $408 million in the second quarter of 2019 despite it being able to deliver a record number of cars in the history of the company.
 
While being far better than the $702 million loss that the company had posted in the first quarter, analysts say that the second quarter loss suggests that the Model 3 has not been success so far in proving to be the product that would get Tesla into profits on a regular basis as the company had hoped.
 
In another shocking announcement, Tesla informed that its longtime chief technology officer JB Straubel would be leaving the company after about 15 years.
 
“I’d like to thank JB for his fundamental role in creating and enabling Tesla,” CEO Elon Musk said on a call with analysts Wednesday evening. “If we hadn’t had lunch in 2003, Tesla wouldn’t wouldn’t exist, basically.”
 
The record deliveries during the second quarter helped it to generate revenue of $6.3 billion. The costs incurred by the company in restricting – primarily in layoffs and store closures, was responsible for the second quarter loss, Tesla said.
 
The company also disclosed that at the end of the quarter, it had $5 billion in cash at hand which was the “highest level in Tesla’s history” and was mainly driven by the company raising a capital of $2.7 billion in May. “We believe our business has grown to the point of being self-funding,” the company wrote.
 
According to analysts, the major headwind that is preventing the company from making sustained profits is the stalled demand for its Model S and Model X cars. Analysts said that company should expect a drop in demand for those models because they are older and as well as costs much higher than the newer and averagely priced Model 3. However the profit margins for the Model S and Model X cars are also higher than Model 3 and therefore a drop in the sale of these models has caused a drop in the overall profit margins of the company. In the second quarter, the profit margin of the company was at 18.9 per cent compared to 20.2 per cent in the previous quarter.
 
“There’s probably a bit too much focus on [Models] S and X,” Musk said during the investor call. “But the story for Tesla in the future is, fundamentally, the Model 3 and Model Y.”
 
Technology from its Model 3 was partly incorporated into its Model S and Model X cars in April resulting in a dramatic increase in the overall range of the cars as well as in their charging speeds.
 
“There may be a false expectation in the market that there’s, like, some big overhaul coming for S and X which then, you know, could cause people to hesitate to buy if they think there’s like some radical redesign coming, which is why I emphasized publicly that this is not the case,” Musk said on the call Wednesday. “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 todays Model S — it’s night and day.”
 
(Source:www.theverge.com)


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