Tesla's surprisingly weak delivery of electric vehicles had a significant toll on the bottom line in the first quarter.
The company announced Wednesday that it lost $ 702 million in the first quarter, a marked reversal of profits for the second half of last year. The loss, which was $ 4.10 per share, was far higher than the analyst of Wall Street analysts surveyed by FactSet at $ 1.81 per share. Quarterly earnings of $ 4.54 billion fell far short of expectations.
Tesla had $ 2.2 billion in cash at the end of the first quarter, down 40 percent from the end of last year. The company spent $ 920 million in March to pay off a bond. Tesla's operations consumed $ 640 million in cash in the first quarter.
Another weakness for the company was the solar business, where revenue declined by more than 35 percent in the quarter.  "We expected weak results, but Tesla's sales and profit losses were stunning," said Vicki Bryan, chief executive of Bond Angle, a research firm, in an email. "Although sales were quiet, the high cost of apparent missteps in the strategy really did bring blood to the bottom line."
The big question for Tesla is whether the decline in car sales in the first quarter was a temporary or slightly more serious phenomenon. Sales of Model 3-class sedans could recover as the company delivers overseas cars. However, demand for the more expensive S and X models fell 56 percent from the fourth quarter in the first quarter, even though the company had lowered the price of the cars by the end of February.
Tesla said on Wednesday the reduction The tax credit could have weakened the demand for Model X and Model S. The company added that after the price reduction, the increase in orders for high-end versions of these models exceeded the available supply. Tesla also hopes that shoppers will be streaming to new versions of the S and X that can travel on full load.
In an investor call following the announcement of the results, a stock analyst asked why Tesla lowered prices for its products in times of strong demand. Tesla's chief executive, Elon Musk, answered that the goal was to make his cars "as cheap as possible".
In recent weeks, analysts have cut their earnings estimates, and after the anemic delivery figures, Tesla is once again in doubt that this is possible to achieve goals and achieve Wall Street's financial goals. His stock barely changed in extended trading after the earnings announcement, but it was more than 30 percent below its recent high.
Tesla said Wednesday it expects to deliver between 90,000 and 100,000 automobiles in the second quarter (versus 63,000) in the first three months of the year. She said she would lose money again in the second quarter, albeit less than in the first quarter, and make a profit in the third quarter.
The supporters of Tesla hope that Model 3 sales will increase and the company will be able to achieve its sales target of delivering 360,000 to 400,000 vehicles this year. Tesla reiterated that goal on Wednesday, but said its vehicle production will be "significantly higher than deliveries," as it's time to move cars from California to other countries.
The company plans to sell a $ 35,000 version of Model 3 next month. The lower price may increase demand for passenger cars, but a smaller fee could make it harder for Tesla to make a profit on the vehicle ,
Tesla's cash position is critical to the future of the company. Mr. Musk intends to produce large volumes of new vehicles, including a large truck called Semi, but setting up the new facilities would cost a lot of money. Many analysts expect Tesla to spend new shares to raise money.
Mr. Musk, who had previously said that the company no longer needed capital, said it had changed its mindset as Tesla was now able to use capital more efficiently. "The idea of raising capital is beneficial at this point," he told the analysts.