- Elon Musk Tesla automotive gross margin went down to 18.9 percent in the second quarter from 20.6 percent in the year-earlier period.
- J.B. Starubel, the co-founder who is with Tesla since the start is leaving the role of chief technology officer and becoming an advisor.
Tesla suffered worse than expected loss this quarter and it foresees yet another major change in the management which casts doubt on the future of electric-car maker’s future.
Although Tesla delivered a record number of vehicles in the second quarter. Tesla lost a big chunk of share i.e. $1.12 which is much higher than the analyzed number. While Elon Musk the CEO of Tesla is hoping to see profits in the next three months ending in September, he told other shareholders that he will prioritize other goals.
For 2nd time in the year, Musk dropped a bombshell in terms of major change in the top management. J.B. Starubel, the co-founder who is with Tesla since the start is leaving the role of chief technology officer and becoming an advisor.
Source- Time Magazine
Straubel’s step back and really low results undermine Musk’s bid to prove that Tesla can make money in a sustainable way by building and selling electric cars. The stock has gone down as much as 12 percent in after-hours trading and was already down 20 percent for the year.
In the second half of last year, Tesla posted profits but 2019 has been turbulent for the company. A disastrous first 3 months of delivery numbers paved the way for record in 2nd quarter followed by another bad 3 months now.
Kevin Tynan a Bloomberg Intelligence analyst said, “Record second-quarter deliveries resulting in a larger-than-expected loss is a clear example that the company will be challenged to recreate the successful US sales model in foreign markets where incumbent, established and well-funded automakers enjoy home-team favor,”
Musk wrote a letter to shareholders stating that he is still aiming for a positive result in third-quarter earnings but will focus on delivering more cars and expanding capacity.
Shrinking Margin
Elon Musk Tesla automotive gross margin went down to 18.9 percent in the second quarter from 20.6 percent in the year-earlier period. The decline was driven by the lower average the selling price of the company’s vehicles.
Tesla expects to launch the all-new Model Y crossover by the fall of 2020. Because of the large market for SUVs and their higher prices, the company sees the vehicle being more profitable than Model 3, which is selling for about $50,000.
Musk is eyeing an end-of-year start date for production in China and wrote in the letter to shareholders that the largest auto market in the world “poses a strong long-term opportunity.”
Tesla is building a battery and vehicle plant on the outskirts of Shanghai, and depending on how quickly it ramps up, the company is targeting production of half a million cars over the next 12 months.
