Published on 07/26/2019
Tesla reported a larger-than-expected loss of over $400 million this past quarter, sending its stock prices into a freefall of over 13.61% since the release. And if that wasn’t enough, the company also announced that chief technology officer and founding member J.B. Straubel will be stepping down from his executive role.
What’s under the hood? Multiple factors in production have Tesla struggling to meet expectations such as…
- Batteries aren’t cheap. Electric car batteries are expensive, and they aren’t getting any cheaper as demand continues to increase.
- Shred the tires. Musk has been pursuing ways to cut costs long term, but these have produced short term costs in layoffs and store closures.
- Slow cars don’t move. Sales of Tesla’s Model X and Model S have slowed, and this has hurt margins as these models make Tesla more money per unit.
How does it affect my wallet?
Tesla has been a growing player in the electric car industry for years, but disappointing financial numbers are suggesting that it’s current production and delivery methods could be unsustainable.
Back to the future. Despite the steep losses, the numbers were actually better than the first quarter, when Tesla reported losses of a whopping $700 million.
- Wishful thinking? Musk doubled down on the company’s projection to deliver at least 360,000 vehicles by the end of 2019
- Refining the basics. Margins and sales of Tesla’s new Model 3 continue to improve.
- Cash in the bank. Tesla isn’t going bankrupt anytime soon with over $5 billion in cash, thanks to large capital raises.
Tesla released a dismal earnings report and the departure of an executive, sending it’s stock into a sharp decline. Shaky production and a decrease in margins are concerning for Tesla Investors, but there is some hope for a brighter future.