Tesla seems to be in big trouble as Elon Musk suggested on Wednesday for a capital raise as the company lost $700 million in the first quarter and is predicting a return to profit in the third quarter. The electric vehicle maker generated $4.5 billion in revenue for the quarter, which is down from $7.2 billion in the previous quarter, but up from $2.6 billion in the first quarter of 2018.
Logistics problems
Talking about what went wrong, Musk discussed the difficulty of shipping three cars globally from one factory, which he said impacted the first quarter results. “This is the most difficult logistics problem I’ve ever seen, and I’ve seen some tough ones,” he said. New CFO Zach Kirkhorn called it “one of the most complicated quarters that I can think of in the history of the company.”
Fluctuating price
Tesla’s cars started the year being a little more expensive than they were at the end of 2018. Initially, the prices were cut by $2,000 to help offset the tax credit dropping to $3,750, but it has since made many more changes to its pricing and availability across all models.
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The demand for Model 3 is still very high. The problem is making it affordable for buyers. To cut the costs, Tesla has closed most of its stores, laying off workers, and shifting to an online-only sales model.
