Analysts and investors, who were already warned to expect disappointment, didn’t walk away disappointed from Tesla’s first-quarter 2019 earnings report. The automaker’s two-quarter streak of profitability came to a crashing halt, with the company warning that next quarter might bring with it another loss.
Quite an about-face from the rosy projections issued at the start of the year. It wasn’t all that long ago that CEO Elon Musk was only mildly worried about Q1. Now, as the company reports a $702 million loss, the onus is on Musk to restore investor enthusiasm the hard way.
Tesla ended 2018 in enviable form. Deliveries were up — way up — and the company would soon report the first back-to-back profits in its history. That all took a nosedive in Q1 2019, with deliveries falling sharply. Musk places much of the blame on the difficulty of getting vehicles to buyers in China and Europe, seasonal variability, and perhaps the halved federal tax credit — an anticipated cut the company tried to offset with pricing changes.
How did Tesla’s finances stack up in Q1? Vehicle revenue fell 71 percent from Q4 2018, to $3.72 billion. Loss per share was $2.90, whereas analysts predicted an average loss of 69 cents. Total revenue also fell short of expectations, at $4.54 billion versus the $5.19 billion predicted.
The company’s available cash stands at $2.2 billion, down $1.5 billion from Q4 2018. A $920 million debt payment that came due last month makes up a large chunk of this drop. If you’re curious, $768 million of that $2.2 billion sum is customer deposits.
As reported before, Tesla Model 3 production rose slightly in Q1 compared to the previous quarter — a throughput increase of just 3 percent — but Model S and X builds fell to their lowest point in years. As the average selling price of a Model 3 sits around $50,000, and both the Model S and X start well north of that figure, a revenue hit was inevitable. It’s no wonder the vaunted $35k Model 3 Standard Range was quickly relegated to ghost status.
In an investors call, CFO Zach Kirkhorn characterized the results as “one of the most complicated quarters that I can think of in the history of the company.”
Musk described the process of shipping vehicles abroad from its Fremont, California plant as “the most difficult logistics problem I’ve ever seen.”
Not helping the company’s balance sheet was a plan to shutter most of its retail stores after rolling out an online-only sales model. That plan almost immediately went off the rails due to lease obligations. Still, numerous sales employees got the axe.
“We will close stores in locations that are hard to find, and continue to add stores in locations where there is high foot traffic for people who are in our target market,” Musk told investors. “When you buy a car you will always do it on your phone.”
Despite the turmoil, Tesla still expects to deliver between 360,000 and 400,000 vehicles this year. As for Musk’s (quite recent) promise of building 500,000 vehicles this year, it’s looking dicy.
“If our Gigafactory Shanghai is able to reach volume production early in Q4 this year, we may be able to produce as many as 500,000 vehicles globally in 2019,” the company stated. “This is an aggressive schedule, but it is what we are targeting. However, based on what we know today, being able to produce over 500,000 vehicles globally in the 12 month period ending June 30, 2020 does appear very likely.”
[Images: Tesla]
TSLA on sale. Get it while it’s hot!
“If our Gigafactory Shanghai is able to reach volume production early in Q4 this year….”
Will be an amazing accomplishment. By most accounts that would be less than half the time of the current world record from brownfield to line rate vehicle production. My guess is that they might be able to do assembly of US sourced kits by then, but they will still need a functional paint shop.
Language barrier? What language barrier? Quality is a universal language.
/s
That raises a good point. It’s to Musk’s advantage that the Shanghai facility won’t be expected to meet the same quality standards as for other international automakers. Just Tesla’s… such as they are.
One might even say it’s a match made in China.
chabuduo
JimZ – you took the word right out of my thoughts.
I guess upset customers protesting at JLR’s dealers and the factory there (which makes but a few models) about lousy quality means Chinese customers expect lousy quality as standard. Yeah, that’s it. The spot JLR is in worldwide is due to complete collapse of Chinese sales. But Americans buy them.
Nothing like a myth about “Chinese” quality in factories run by Westerners to keep America happy, yet oblivious millions shop at Walmart every day. The US plutocracy though outsourcing to China were responsible for exporting millions of manufacturibg jobs, but you lot blame the Chinese instead! Cognitive dissonance or what?
When US-built Volvo S60s from South Carolina suddenly jump to the top of the quality heap of all Volvo models, let me know. Because it’ll be US craftsmanship that makes the difference, LOL.
Musk described the process of shipping vehicles abroad from its Fremont, California plant as “the most difficult logistics problem I’ve ever seen.”
Really? Haven’t car companies in Europe and Japan been doing this on a mass basis since the 1950s?
Before the internet and mobile phones even.
It’s 36 miles from the Fremont factory to the port.
Then a roll on / roll off barge ride on the ocean. Then truck to the sales point.
Sometimes even a pale, fish-face executive can’t get things done so easy.
Perhaps HR used inferior criteria when hiring the logistics people.
remember, this is Tesla bizarro world. Nobody else has ever shipped cars to another continent before, Tesla is really breaking new ground here.
What Tesla didn’t understand is all the regulations and hoops you must jump through to ship a car, for instance, to China. There’s a lot of paperwork, rules and regulations that these things must abide by to even be considered released on the roads there.
Cars that go to China require the following:
Specific lighting
Specific areas where VINS are stamped
CCC (China Compulsory Certification) markings on items that are required to have that marking
Ensuring your suppliers are CCC certified
Not sticking up for Musk here as I’ve been wanting him to STFU for quite awhile now but there’s a lot more involved for vehicles being shipped and sold in other areas of the globe of which they don’t have any experience in. You really think because “someone else has done it” means those other manufacturers are going to help them with import/export? LOL
We are talking 36 miles of _California_ roads here. And a California port. And a high profile product which everybody and his retarded uncle runs around having all manners of opinions about.
We’re also talking excuses and delaying tactics to keep investors from fleeing en masse.
Tesla just used the oldest (and perfectly legal) accounting trick in the book ; bring forward sales to this quarter and put off liabilities to the next. Its all there in plain black and white in the financial statements that stockbrokers apparently can’t read.
Tesla had poor results last quarter now the liabilities are starting to come due from last financial year.
There are no problems with productions or deliveries, only with sales. There are yards all over the place full of unsold vehicles. Its Sinclair Research all over again, first they couldn’t supply the market with Spectrums then they were drowning in them.
In reality the demand for a $70k experimental car probably has already been met.,
True, a niche product at best.
I’ve never understood why people seem excited to see Tesla fail. Elon has built an automobile company and a space company, among other things. Sure, he’s different than most of us, but it takes a different kind of person to do what he’s done. Shouldn’t we support his ingenuity and want him and his companies succeed? How many American jobs are lost if he fails?
I don’t think anybody is excited, most simply feel justified in having called Lord Elon’s BS rhetoric exactly what it is. I’ve wished Tesla success many times, it’s the rabid fanatics that have turned me into a doubter, along with Lord Elon’s childish stunts.
You’re right, he did a lot of things most people couldnt, like calling someone a pedophile repeatedly without cause, tweeting vast misinformation and making promises he couldn’t keep. Well, everybody *could* do those things, but wisely choose not to.
No I agree. I do hope he succeeds. Mainly it’s the Tesla fans who make it hardest to root for the company.
Teslas are expensive toys, and people who buy them are no different than someone who buys a Mercedes or Volvo or any other expense toy car. Yet of course, that isn’t how those buyers act.
I have no problem with the way Elon acts either. If you still believe anything that comes out of the Tesla Chief Marketing Officer’s mouth at this point, that’s on you. No reason he shouldn’t continue to play people for fools if they are willing to be played. He’s trying to keep his company afloat until it can keep itself afloat (if possible).
What I’ve never understood is how SpaceX is the model of a perfect corporate space company, and Tesla is a hot mess.
What SpaceX is doing, is much easier. Toyota, and others, hasn’t been refining competing products for half a century or more. Space projects have been almost exclusive the domain of five year planners. If Lada was Tesla’s sole competitor, Tesla would have an easier time as well.
His name just comes up a lot. There are plenty of other charlatans out there. I resent him because his car company is built on hype, tax subsidies, legal mandates, “compliance,” “credits”, etc.. Whatever you call them, they are subsidies ultimately paid for by consumers and taxpayers and form the basis of a pile of wealth sucked down by a scam artist.
Musk has made a lot of money off of this “green” con game. Many others have done the same, or similar. Al Gore is a good example of green graft. What a disgusting flop-sweating pile of crap he is. I would rather be stuck with Musk in a space ship to Mars than share an elevator with Gore for two minutes.
Rich people buying subsidized vehicles based on endless hype and phony environmental virtue-signalling? No thanks. Bite me, Elon. Bernie Madoff must be wondering how he missed this scam.
How many Indian jobs are lost when the authorities shut down a robo-call center? There would be no Tesla without tax credits.
If they could produce a car without failing at welding it together and if they could fix a car if in a fender bender I might consider them a car manufacturer. What they are is a scam.
Tesla makes incredible products. Color me impressed. It would be my first choice for a BEV at this moment in time.
That being said, Musk turned his zeal into squeal. He should have kept to being the visionary. Nope, he couldn’t keep quiet.
1) Musk initially wouldn’t shut up about how much better TSLA will be than Detroit…or any other automaker for that matter. As a manufacturer myself, those comments ticked me off. Say what you will about the auto industry’s faults, automakers are exceptional at running the huge logistical machine that takes raw material and parts, puts it all together in a package consumers want, and gets it to market in a timely manner.
2) Musk exaggerated about timing and coming features in his products. That bothers people.
3) Musk played fast and loose with his comments as the head of a publically-traded company. These comments immediately caused people to trade TSLA stock. Others have gotten jail time for less.
4) Musk made comments that made people question his mental health. He also enjoyed a joint with Joe Rogan…not against the law, but against better judgement.
Musk was like a cocky, star high school quarterback who would constantly spout off about how great he was as he had his arm around the prettiest girl in school. Teachers loved him. The sports press couldn’t get enough of this phenom. Human reaction is ripe for schadenfreude…the joy in another’s misfortune. That high school quarterback tripped and fell down the stairs and received a compound fracture to his throwing arm on the eve of a Big-10 scout’s visit. So, some tended to feel a bit smug.
And what thelaine said.
I agree that Musk should have kept himself in the background and be the visionary, while surrounding himself with those that really understand what it takes to build a car and car company.
“I’ve never understood why people seem excited to see Tesla fail.”
I don’t. I just want Elon Musk fanboys to S.T.F.U. Yes, it’s great that you admire this guy. But strutting around gloating as if you yourself personally contributed to these companies’ successes goes way beyond crass.
“I’ve never understood why people seem excited to see Tesla fail.”
That face is SOOOOOOOOOOOOOOOOOOO punch-able.
“I’ve never understood why people seem excited to see Tesla fail.”
Maybe it’s all the hype contradicted by all the missed goals?
It’s one thing to be a visionary. Quite another to miss goals he set for himself and his ventures.
I see where people are becoming more skeptical about Elon’s visions of the future.
What Elon needs is more successes when it comes to his BEV cars because his rocket-science ventures are proving themselves continuously.
Tesla deserves to fail because even after a whopping decade and a half it hasn’t even managed something as basic as manufacturing a vehicle that may be fully charged in about the same time as it takes to fill a fuel tank!
I’d like to know what battery on the market takes minutes to go from empty to full on any product: Phone, watch, power tool, etc.
I just wish he would quit lying to us. We can handle the truth.
I think JohnTaurus, thelaine, and MartyToo described it best.
It’s not that I want Tesla or Musk to fail. It’s that I want their success to be actual success. Not a house of cards that will fall and wipe out a vast pile of wealth and jobs. Not a slow boondoggle that will lose money every year. And remember, tax money played a large part in getting this company rolling. And tax money helped *rich people* buy Model S and Model X vehicles that most of us can’t afford.
People should not be rewarded for lies and incompetence. If they were, it would break our society. So if Tesla succeeds, I want it to succeed because it did a good job making cars, not because Musk told the best lies.
All this makes Ford’s $500M licensing agreement with Rivian look brilliant.
Tesla better be putting a lot of effort into the upcoming Model Y.
It makes Ford’s agreement look half as stupid as if they’d given Rivian a billion dollars, but that is still pretty far from looking brilliant.
Even if Rivian literally sets the money on fire, Ford gets a PR boost just by announcing the investment. I think the timing, set against Tesla’s quarterly earnings report that knowledgeable people knew would be terrible, was no coincidence. A bump in Ford’s stock price of even a few cents lets them make just about as much as the total planned investment.
Tesla’s instability is one of the reasons I passed on the Model 3, even after driving it. Glad I got a Hyundai instead.
“Electric vehicles will barely help cut CO2 emissions in Germany over the coming years, as the introduction of electric vehicles does not necessarily lead to a reduction in CO2 emissions from road traffic. Natural gas combustion engines are the ideal technology for transitioning to vehicles powered by hydrogen or “green” methane in the long term.
Considering Germany’s current energy mix and the amount of energy used in battery production, the CO2 emissions of battery-electric vehicles are, in the best case, slightly higher than those of a diesel engine, and are otherwise much higher.”
http://www.cesifo-group.de/ifoHome/presse/Pressemitteilungen/Pressemitteilungen-Archiv/2019/Q2/pm_20190417_sd08-Elektroautos.html
“the amount of energy used in battery production”
How would they have that information? It’s proprietary. You’d have to know what the process was and materials used. All proprietary. Sounds like someone gave them the conclusion first, then they put together a report to back it up.
Density is increasing on batteries and the processes to make them are changing quickly as are the materials. It’s a moving target. Any info that they might have is probably years old and outdated.
“Sounds like someone gave them the conclusion first, then they put together a report to back it up.”
Saying that researchers use the same tactics as EV proponents isn’t the same thing as demonstrating that researchers ignore everything inconvenient like EV believers do.
A guy I know recently drove his Tesla from Visalia, CA to Cheyenne, WY. It took him three days utilizing the Charging stations provided along the route planned for him by Tesla’s Trip Service.
Since he was traveling with his wife and their two (pre-teen) kids, the three day trip was do-able because they visited attractions along the way, and are planning the same route back.
BEVs may be ideal for densely populated areas like Europe, CA, NY or FL, but not so whoopee for long distance travel. And for most Americans air pollution or CO2 emissions don’t even factor in for consideration in the equation.
Your friend certainly planned his trip around the attractions they stopped to see. The charging stops would have added hours, not days, to the trip, unless he decided to use low-power chargers for some reason.
Teslas have crossed the entire country in 50 to 55 hours.
But I agree with you that the American car buying population doesn’t care at all about CO2 (including me, with an EV in my garage).
SCE to AUX, I’m sure it is all of the above. Traveling with two pre-teens is no fun. BTW, the Holiday Inn Express locations he stayed at along the way allowed him to run an extension cord out to his Tesla for charging overnight.
Many places they ate along the way, like McD, DQ, Dunkin’ Donuts, Starbucks, etc, also allowed them to plug in an extension cord.
Every electron helps.
But BEV fans already know that, that’s why they look like scattering cockroaches looking for an electrical outlet at every stop they make.
I’ve seen it for myself at various places I stopped on our trips.
CO2 emissions don’t really matter in the real world anyway.
Agreed. As a matter of fact, I am pro-CO2 emissions. It has done far more good than harm, if it has done any harm at all. Still, it is an interesting article.
Let’s get this right Jaguar and Audis electric models already outsell the model S and X in Europe, this is a dot com style bubble about to burst
Yes, let’s get this right…
2018 sales volumes in Europe:
Tesla Model S – 17386
Tesla Model X – 12108
Jaguar I-Pace – 6490
Audi e-tron – 0, but several hundred in 2019 so far.
Yep, those competitors are killing Tesla.
But don’t worry, the real death blow to Tesla will come in the form of lawsuits over their pending Level 5 autonomous driving feature.
This is 2019, not 2018. Tesla Model S and Model X sales have fallen off a cliff. Jaguar I Pace and Audi e-tron are clobbering Tesla Model S and Model X sales by nine to one. Get in touch with current events, not ancient history. And, by the way, the Porsche Taycan, not yet in production, has already outsold Tesla Model S sales for the coming year.
“the Porsche Taycan, not yet in production, has already outsold Tesla Model S sales for the coming year.”
Huh? So, how do you register sales/deliveries for a car that’s not in production? They’re taking deposits, but no sales yet. I also suspect that many of those deposits won’t be delivered this year.
“not yet in production, has already outsold Tesla Model S sales for the coming year.”
Huh? So, the coming years’ sales of the Model S, which haven’t occurred yet so we don’t know the numbers, have somehow been exceeded already by a car that isn’t for sale yet or in production?
@arthurk45: You’re very consistently wrong with every comment about Tesla.
Please cite some sales data to support your wild claims, particularly for cars that have actual sales.
As for the Taycan – it shows promise, and it could outsell the Model S someday, but EV mfrs have a way of bungling promising vehicles (see Hyundai, Chevy, and Nissan).
…If you’re curious, $768 million of that $2.2 billion sum is customer deposits…
By accounting rules, that $768 million can’t be touched until the deposit holder has their vehicle delivered. So cash on hand is closer to $1.5B. There is only 2 more quarters worth of cash that can take a $900M hit.
Any further reading on this you can link to? As of what date is this stat accurate? If this is true I’m shocked no analysts asked about this on the earnings call.
@APaGttH: Based upon 6-figure levels of reservations for Model 3 and Y (at $1000 to $2500 each) your numbers make sense, and it seems clear that Tesla must turn the ship around soon.