First quarter loss for Tesla as deliveries fall

Elon Musk's declarations that Tesla had entered an era of sustainable profits turned out to be premature, as the electric-car maker began the year with a $494 million (€443 million) loss and rekindled concerns about its cash.

Tesla posted an adjusted loss of $2.90 a share for the three months ended in March, missing analysts’ average estimate for a $1.30 deficit. A record drop in quarterly deliveries snapped the company’s two quarters-long streak of positive earnings.

Mr Musk, Tesla’s chief executive, assured investors in a quarterly letter that higher deliveries and cost cuts will help the company narrow its loss in the second quarter and return to profitability the following three months. He hinted ahead of the earnings results that Tesla may need to seek more funds to help finance a hugely ambitious pursuit: to deploy fully self-driving electric cars in a shared service next year.

Tesla shares rose 2.1 per cent to $264.05 as of 5.30pm on Wednesday in New York, after the close of regular trading. The stock is down 22 per cent this year.

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Cash status

Tesla ended March with $2.2 billion in cash and equivalents, down from $3.7 billion three months earlier. In addition to operating cash flow worsening relative to the previous quarter, a February debt payment – the company’s largest ever – drained $920 million from its coffers.

The halving of a federal tax incentive for Tesla purchases starting in January dragged on US demand in the quarter, and Tesla struggled to offset that drop-off by starting deliveries of the Model 3 saloon in Europe and China.

Also potentially putting a damper on results were frequent price changes and a botched retail strategy shift that stoked confusion among employees and customers.

Tesla finished the quarter with $768 million in customer deposits, holding fairly steady relative to the $793 million at the end of last year.

During Mr Musk’s deep dive presentation into the technology behind Tesla’s Autopilot system and its plans for a fully autonomous robotaxi, the chief executive reset expectations for future cash flow. Whereas the company had said in the past that it expected to be positive in every quarter beyond the first three months of this year, Mr Musk said the goal is now to be “neutral” while Tesla is building up a fleet of self-driving vehicles.

When asked by an analyst how much the endeavor is costing Tesla, Musk replied: “It’s basically our entire expense structure.” – Bloomberg