Despite delivering a record number of its electric vehicles in the second quarter, Tesla endured another round of financial losses despite pressure to become steadily profitable.
The losses come as the company is still spending heavily on capital projects. CEO Elon Musk said the automaker is on target to open a plant in China by the end of the year and is making plans for another in Europe.
The company is also ramping up to start producing its next vehicle, the mid-priced Model Y SUV, later this year. Tesla said it will potentially be more profitable than the Model 3 sedan, with which he shares about three-quarters of its parts.
“Tesla is expanding at an exponential rate,” Musk said.
But it is still losing money at faster clip than predicted by analysts. Tesla lost $408.3 million in the quarter, an improvement from a $718.1 million loss a year earlier. Revenue totaled $6.35 billion, up 59% from a year earlier.
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S&P Global Market Intelligence analysts had estimated second-quarter revenue of $6.44 billion in revenue and a net loss of $298 million.
Musk said he expects the automaker to come close to breaking even in the current quarter and to make a profit in the final quarter. He also said demand continues to be strong.
One analyst questioned why Tesla lowered the price of the Model 3 if demand is so strong. Musk said the price as cut by $1,000 to partially offset the loss of an electric-vehicle tax credit. Plus, he said, “Making cars more affordable is part of the Tesla mission.”
Tesla makes two luxury vehicles, which carry big price tags and, likely, bigger profit margins. But Musk downplayed their importance in the long run, saying that the future of the company depends on the success of the Model 3 sedan and Y SUV.
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Sales of the luxury Model S sedan and Model X SUV have slowed as the vehicle body styles age and customers gravitate toward the cheaper Model 3. Production of the Model S and X totaled 14,517 in the second quarter, down about 41%.from a year ago.
By comparison, Tesla produced 72,531 Model 3s, which nearly tripled from a year earlier. The average Model 3 sold for $50,000 in the second quarter. In total, Tesla produced 87,048 vehicles in the second quarter.
Tesla’s stock rose 1.8% to close at $264.88 during regular trading hours on Wednesday. But the share price fell 11.1% in after-hours trading to $235.50.
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The company is also expected to reveal an electric pickup this year, though it’s unclear when it will be available for sale.
Follow USA TODAY reporters Nathan Bomey on Twitter, @NathanBomey and @ChrisWoodyard.
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