Business News Start-ups outside India

Tesla Shares Plummet As Company Trims Down Delivery Numbers

Share on Facebook
Tweet about this on TwitterShare on Google+Share on StumbleUponShare on LinkedInPin on PinterestShare on Reddit

Elon Musk had predicted Tesla to become profitable by the end of this year but going by the recent financial reporting and a statement by Deepak Ahuja, Chief Financial Officer of Tesla, it may not happen anytime before first quarter of 2016.

Tesla reported its second quarter financial earnings report and going against the expectations, it reported better revenue as well as less loss per share than experts had predicted. It reported $1.20 billion revenue on a non GAAP basis and loss of $0.48 cents per share opposed to $ 1.19 billion revenue and $0.60 cents per share loss predicted by the experts.

However, the share value which was 1.5% up at about $270.13 before the announcement quickly fell down by 7 %, largely due to the reduction in delivery numbers by Elon Musk of Model X cars. Earlier, musk had predicted 55000 car deliveries in the year but gave an indication the real number can be down by as many as 5000 cars owing to the production challenges to make Model X cars.

Calling the new Model X “a particularly challenging car to build”, Musk said,

We do think it’s going to be quite a challenging production ramp. We don’t want to drive to a number that’s greater than our ability to deliver high-quality vehicles.

He further added that the production of other Tesla car, Model S sedan may get hampered due to Model X as they both are manufactured on the same assembly line at Tesla’s factory in Fremont, Calif. However, Tesla did manage to meet the delivery numbers for second quarter, delivering 11507 vehicles to customers against the prediction of 10000-11000 cars, after delivering 10030 cars in Q1.

Tesla has been spending quite heavily to introduce the sport utility vehicle Model X and to develop a more affordable sedan Model 3 and reportedly spent a massive $405 million on capital expenditures thereby adding to the continuing losses as well as delay in getting to a positive cash flow stage.

Additionally Tesla also reported that they had generated about $20 million revenue in their new program of selling used cars and according to Cathie Wood, an industry analyst and head of ARK Investment Management, Tesla may have a potential winning hand in the used car market given the encouraging response of customers to used Tesla cars.


Add Comment

Click here to post a comment

Your email address will not be published. Required fields are marked *