CEO Elon Musk said the company will lose money during the first quarter, but be profitable again after that.
Tesla’s tease made the $35,000 Model 3 a reality for the legions of fans who had been waiting for the entry-level model the company’s founder, Elon Musk, promised about two years ago.
And while the announcement sated many who wanted the lowest-priced Model 3, lost in the hubbub was a less promising announcement Musk made later in the call.
“Given that a lot is happening in Q1, we do not expect to be profitable in the first quarter,” he said during a call with media and analysts. He quickly added that the company expected to return to profitability in the second quarter.
It’s that tidbit of information that like drove the company’s stock down more than 5% in early trading on Friday. Musk initially predicted when the company turned its first GAAP-based profit in the third quarter of last year, that it would remain profitable each quarter going forward.
(Tesla now selling $35K Model 3; selling vehicles online only. Click Here for the story.)
Tesla is now producing the $35,000 version of the Model 3. It can be ordered online – the only way to buy a Tesla now.
However, he suggested during the last earnings call that the company was facing “a lot of headwinds” for Q1 and it may lose money during the period.
The call also confirmed that Musk is searching hard for places where it could cut costs. The company recently engaged in a round of layoffs and also eliminated its referral program in order to cut costs and bulk up the bottom line.
(Click Here for details about Musk’s declaration Tesla will have a driverless car by the end of the year.)
Musk also said the company’s move to only take orders online and eliminate most of its brick-and-mortar sales location and further reduce its work force were related to cost cutting. “There’s no other way for us the achieve the savings for this car to be financially sustainable,” he said.
In the meantime, those online orders for the $35,000 Model S will be filled within two to four weeks, Musk said. The “Standard Range” Model S travels 220 miles on a single charge, boasts a top speed of 130 mph and zips from zero to 60 mph in 5.9 seconds.
(SEC cites Musk for contempt. Click Here for the story.)
For an extra $2K, one can order the “Standard Range Plus,” which pushes those numbers to 240 miles on a charge, 140 mph top speed and zero to 60 mph in just 5.3 seconds.