Tesla lost $408 million in its latest quarter as it struggles to prove it can make money selling electric cars at mass-market prices.
The setback announced Wednesday had already been telegraphed by Tesla CEO Elon Musk. Still, it underscored Tesla’s ongoing challenges and helps explain why the company’s shares have plunged by more than 20% this year while the Standard & Poor’s 500 index has surged by 20%.
On the upside, Tesla’s second-quarter revenue climbed 47% from the same time last year to $5.2 billion. It also generated $614 million in cash, helping fatten its bank account to $5 billion through June. That’s money Tesla is going to need to repay its massive debt and other bills.
In a sign that investors are still worried about Tesla’s future prospects, its stock dropped more than 10% to $237.02 in extended trading after the results came out.
Tesla has sustained losses of more than $6 billion since its inception, but Musk promised a year ago that the road ahead would be paved with profits. The Palo Alto, California, company made good on that pledge with a profit of $451 million during the final half of last year. But it has now has posted successive quarterly losses totaling $1.1 billion in the first half of this year.
The loss of $2.31 per share for the April-June quarter was worse than the $1.27 per share loss that analysts had expected, according to FactSet. It also came despite Tesla selling more electric cars - 95,356 - than in any other quarter in its history. The company remains behind the sales pace needed to realize Musk’s goal of delivering 360,000 to 400,000 cars this year.
In a shareholder letter released with its second-quarter result, Tesla said it will focus more on increasing its manufacturing capacity and its deliveries of cars instead of hitting a specific financial target.
Musk then told investors during a conference call that Tesla should be “around break even” in its current quarter ending in September and expected to turn a profit during the final three months of the year. “I feel pretty confident about that,” Musk said.