Tesla Inc said on Thursday it would not be profitable in the first quarter, as i...
SAN FRANCISCO - Tesla Inc said on Thursday it would not be profitable in the first quarter, as it offered for the first time a $35,000 version of its Model 3 sedan and said its global sales would now be online-only, steps designed to increase demand and cut overhead costs for the electric vehicle maker.
Shares of Tesla fell 3.4 percent after hours. Investors have voiced concerns about whether Tesla would be able to maintain profit margins through cost cutting - such as recent layoffs - as it reduces prices of its newest vehicle. Musk has often shared that his strategy for Tesla was to build higher-priced cars - the Model S and X - whose success would ultimately usher in a $35,000 mass-market car, followed by an SUV, the Model Y, which is currently in development. But customers who reserved the Model 3 at that lower price have waited nearly three years since Musk first promised it.
As of the fourth quarter, Tesla said it recently opened 27 new locations, bringing its total of stores and service centers to 378. “This is a game changer,” said Wedbush Securities analyst Daniel Ives. Since tax credits will continue to decline over 2019, “this is really exactly what the doctor ordered,” he said.
“The margin on the vehicle obviously is going to be very small if there’s any margin there at all,” said David Kudla, CEO of Mainstay Capital Management, which has a short position in Tesla.
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