Tesla lost a massive $702 million in the first quarter of 2019, the company announced this week.
Despite posting back-to-back profits for the first time ever at the end of last year, the automotive company reported the significant loss on Wednesday (April 24).
Wall Street had already anticipated a giant loss for the company, but the newly released figures were much worse than originally expected.
As reported by The Verge, CEO Elon Musk had predicted Tesla would make a loss in February, hence why analysts were waiting in anticipation for their latest announcement.
In the official filing posted on Wednesday, Tesla noted its revenue was also down 37 per cent compared to the prior quarter; the company generated $4.5 billion in revenue, which is down from $7.2 billion in the previous quarter.
Despite Musk previously predicting Tesla would return to profitability for good starting this quarter, the company also announced it doesn’t expect to turn a profit in the second quarter either.
Karl Brauer, executive publisher at Kelley Blue Book and Autotrader, told CNN that one reason the company is so far in the red is because a $7,500 federal tax credit was cut in half for Tesla vehicles at the beginning of the year.
Another reason is that brands like Porsche, Audi, Mercedes and Hyundai are all giving Tesla meaningful competition for the first time ever by entering the electric vehicle market, he said.
None of these issues, by themselves, would cause the severe drop in sales and revenue Tesla experienced in Q1, but the combination was powerful. Even more troubling? None of these issues are going away. This is the new normal for Tesla.
The company revealed earlier this month that it delivered approximately 63,000 vehicles to customers in the first three months of 2019. This was a 31 per cent drop compared to the prior quarter and – more worryingly – was the single largest decline Tesla has ever reported.
Despite the loss, Musk told investors during a conference call that although the last quarter might have been rough, Tesla has a rosy outlook, CNN reports.
The CEO said demand for all three of Tesla’s electric vehicle models is strong, explaining:
We also have a lot of markets [abroad] where we haven’t yet tapped into demand, especially the Model 3.
As such, the company said it expects its sales figures to look much better next quarter.
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A Broadcast Journalism Masters graduate who went on to achieve an NCTJ level 3 Diploma in Journalism, Lucy has done stints at ITV, BBC Inside Out and Key 103. While working as a journalist for UNILAD, Lucy has reported on breaking news stories while also writing features about mental health, cervical screening awareness, and Little Mix (who she is unapologetically obsessed with).