Tesla reported a wider-than-expected loss and less revenue than anticipated during the first quarter as demand for its electric cars waned after the company lost a valuable tax credit for buyers on Jan. 1.
Executives braced investors for another loss in the second quarter before returning to profitability in the second half of the year.
Here's what Tesla reported, versus what analysts expected based on average estimates compiles by Refinitiv:
- Loss per share on an adjusted basis: $2.90 versus 69 cents expected
- Revenue: $4.54 billion versus $5.19 billion expected
On an unadjusted basis, Tesla lost $702.1 million, or $4.10 a share during the quarter ended March 31, compared with a loss of $709.6 million, or $4.19 a share during the same period last year.
Its shares, which closed down by about 2 percent Wednesday, were about flat after the markets closed.
The company previously warned that first-quarter income will "be negatively impacted" because of "lower than expected delivery volumes and several pricing adjustments." That may be one reason shares remained flat after the quarterly update-- investors already anticipated some disappointments.
Tesla said earlier this month it delivered 63,000 cars during the quarter, well below analysts' consensus estimates of 76,000.
Vehicle sales fall from 4Q
Sales of its vehicles rose 36% to $3.72 billion from $2.74 billion a year ago. But that was down 41% from the fourth quarter when the company generated $6.32 billion in automotive revenue. A $7,500 federal tax credit paid to buyers of its electric cars was cut in half Jan. 1, speeding up demand during the last months of the year as customers rushed to get their purchase in and depressing demand in the first quarter.
CEO Elon Musk also noted that logistical challenges, and seasonality impacted sales for the first-quarter. People don't like to buy cars in the winter, he told analysts on a conference call.
Investors have been paying close attention to shifting levels of demand for Tesla's Model 3 electric sedans, especially in China and Europe, after Tesla focused its efforts on overseas markets late in the first quarter.
They are looking to understand whether Tesla can profitably make the Model 3 after several price changes. Tesla briefly sold a version of the Model 3 for $35,000 as originally promised, but soon removed that option and raised prices.
Tesla CFO Zach Kirkhorn said that the average sale price of a Model 3 in North America today stands around $50,000.
Merit to capital raise
On the call, Musk revealed Tesla's plans to launch an insurance product of its own, possibly as early as next month. He also said that, while capital has not been a constraint on Tesla's growth so far, in his view, "there's merit to the idea of raising capital at this point."
The company paid off $920 million in debt with cash last month and faces another $180 million in debt coming due in April. It announced plans to close stores and implemented layoffs during the quarter to rein in costs.
The company is still trying to decide where it will produce its forthcoming Model Y compact SUV, Musk said, but is leaning towards making the car at its Fremont, Calif., car plant. Earlier, Tesla executives considered building the Model Y at their Gigafactory outside of Reno, Nevada.
Tesla is currently building a new battery factory and car assembly plant in Shanghai, developing autonomous vehicle technology, and preparing to manufacture its Semi trucks and Model Y compact SUVs.
Correction: This article was updated to correct Tesla's year-ago earnings.