Close
Date TimeApril 28, 2019
VoiceLast week, Tesla (NASDAQ:TSLA) reported ugly results for the first quarter of 2019. The electric car pioneer had warned of impending trouble earlier this month, but investors were still caught off guard by the scale of its losses. Tesla's net loss of $4.10 per share -- or $2.90 per share, excluding stock-based compensation costs -- was worse than even the most bearish analysts' estimates. On average, analysts had been expecting a loss of just $0.69 per share.
Not surprisingly, Tesla's terrible Q1 results did nothing to dampen the enthusiasm of CEO Elon Musk. Indeed, Musk confidently predicted that Tesla will return to solid profitability in the second half of 2019 and will produce positive free cash flow beginning this quarter.
However, one comment Musk made during the Tesla earnings call should make investors extremely skeptical of these rosy predictions. Let's take a look.

Tesla has a demand problem
A sharp sequential drop in vehicle deliveries was the main cause of Tesla's first-quarter earnings wipeout. Tesla delivered about 63,000 vehicles last quarter, down by 31% from the fourth quarter of 2018. The Model S and Model X performed especially poorly, with 12,100 deliveries combined, down more than 50% compared to the company's typical run rate for 2017 and 2018.
This Elon Musk Comment Should Terrify Tesla Investors
Part of the slowdown was driven by a planned increase in the number of vehicles in transit to customers outside the United States. Logistics problems also pushed some deliveries into the second quarter. That said, weak demand was the primary cause of the big decline in Model S and Model X deliveries.
Model 3 demand has cooled noticeably as well. Many investors had expected the introduction of the $35,000 standard-range Model 3 to create a huge backlog of demand that would take months to fill. Price cuts for higher-end variants should have added to that demand.
Instead, Tesla is currently promising deliveries within two weeks for all versions of the Model 3 across most, if not all, of the United States. That's a huge change from a couple of years ago, when Elon Musk claimed the Model 3 reservations list was growing steadily even as Tesla was "anti-selling" the car, with no advertising, no discounts, and no test-drives available.

Musk expects a quick rebound in orders
Tesla's projections that free cash flow and earnings will return to positive territory soon depend on a rebound in deliveries. The company's official full-year guidance calls for 360,000 to 400,000 deliveries, including 90,000 to 100,000 in the second quarter. At the midpoint of those ranges, Tesla would have to deliver an average of 111,000 vehicles per quarter in the second half of 2019, 76% ahead of its Q1 delivery rate.
This Elon Musk Comment Should Terrify Tesla Investors
However, it's becoming clear that order activity would need to accelerate dramatically to support that level of growth. During the Q1 earnings call, Musk stated, "So, with the recently announced product improvements on Model S and X, as well as continued expansion of Model 3 globally, we expect the order rate to increase significantly throughout the year ... commensurate with our production levels." He reinforced that point later in the call in response to an analyst's question, noting that "people just generally don't like buying cars in winter."
It's true that auto sales tend to be seasonally weak during January and February. However, the introduction of the $35,000 Model 3 and price cuts for the rest of Tesla's portfolio should have boosted demand. Furthermore, March and April tend to be stronger months, so Tesla's order activity should have already rebounded to whatever level is sustainable.
Instead, Musk's comments on the earnings call indicate that he is counting on order activity to continue accelerating throughout 2019. That should be very worrisome for investors, because it means Tesla's forecast for the rest of the year is likely built on unrealistic assumptions.

When it comes to Tesla, skepticism pays
Experience shows that Musk's apparent confidence that demand will accelerate throughout 2019 doesn't mean much. For example, Musk stated on Tesla's first-quarter earnings call that he was "optimistic about being profitable in Q1 and for all quarters going forward." Instead, Tesla lost more than $700 million last quarter and expects to report another loss in Q2.
In fact, there are good reasons to doubt that demand will recover, particularly in the U.S., which has historically accounted for the bulk of Tesla's sales. First, Tesla has already exhausted the pool of pent-up domestic Model 3 demand. Second, the federal electric vehicle tax credit for Tesla purchases is set to fall by 50% ($1,875) on July 1, raising the effective price of a Tesla in the second half of 2019. Third, many potential buyers may choose to wait for the Model Y crossover that was unveiled last month. Crossovers are far more popular than sedans today.
Musk is trying increasingly outlandish tricks to pump up demand for Tesla vehicles, such as his recent claim that Tesla owners will be able to make up to $30,000 annually by renting out their vehicles through a robotaxi network as soon as next year. (Most experts agree that a wide rollout of robotaxis will take years or even decades to achieve.) That may persuade some consumers to buy a Tesla, but it isn't likely to be a long-term game changer.
To be sure, there are plenty of interesting projects under way at Tesla. However, if history is a guide, they could all take longer than expected to execute. Meanwhile, demand is cooling for Tesla's existing vehicles, which may lead to a big shortfall in deliveries in 2019 and 2020. That could further stress Tesla's weak balance sheet and drive its share price even lower.

Newly released! 10 stocks we like better than Tesla
Investing geniuses David and Tom Gardner revealed what they believe are the ten best stocks for investors to buy right now… and Tesla wasn't one of them! That's right -- they think these 10 stocks are even better buys.
And when the Gardner brothers have a stock tip, it can pay to listen. After all, the newsletter they have run for over a decade, Motley Fool Stock Advisor, has quadrupled the market.*

Related Stories
SpaceX launches another 60 Starlink satellites while setting two rocket reuse recordsSpaceX launches another 60 Starlink satellites while setting two rocket reuse records
Tesla stock soars as surprise profit answers skepticsTesla stock soars as surprise profit answers skeptics
Merkel Cheers VW’s Electric Push Amid Growing Climate CritiqueMerkel Cheers VW’s Electric Push Amid Growing Climate Critique
Latest News
I Sobbed Uncontrollably: The Moment Dads Truly Bonded With Their Kids'I Sobbed Uncontrollably': The Moment Dads Truly Bonded With Their Kids
Eco-Friendly Christmas Cards For A Greener Festive SeasonEco-Friendly Christmas Cards For A Greener Festive Season
The Best (And Worst) Christmas Sandwiches On The High Street – RankedThe Best (And Worst) Christmas Sandwiches On The High Street – Ranked
Is Getting Layered At Work An Automatic Demotion?Is Getting 'Layered' At Work An Automatic Demotion?
What Can You Actually Do If Youre Impacted By Medicine Shortages?What Can You Actually Do If You're Impacted By Medicine Shortages?
7 Amazing TV Political Debate Moments In Honour Of Tonights Head-To-Head Clash7 Amazing TV Political Debate Moments In Honour Of Tonight's Head-To-Head Clash
Irans Guards warn of decisive action if unrest continuesIran's Guards warn of 'decisive' action if unrest continues
Six killed as avalanche buries Indian patrol on disputed glacierSix killed as avalanche buries Indian patrol on disputed glacier
Sri Lankas Rajapaksa likely to re-boot China tiesSri Lanka's Rajapaksa likely to re-boot China ties
Still Ye: Kanye West and Dr Dre team up for Jesus Is King follow-upStill Ye: Kanye West and Dr Dre team up for Jesus Is King follow-up
Leaders
Donald-TrumpDonald Trump
45th President of the United States of America
Mike-PenceMike Pence
Vice President of the United States
Boris-JohnsonBoris Johnson
British Prime Minister
Angela-MerkelAngela Merkel
Chancellor of Germany
Emmanuel-MacronEmmanuel Macron
President of France
Justin-TrudeauJustin Trudeau
Prime Minister of Canada
Nancy-PelosiNancy Pelosi
Speaker of the United States House of Representatives
Barack-ObamaBarack Obama
44th U.S. President
Theresa-MayTheresa May
Member of Parliament of the United Kingdom
Vladimir-PutinVladimir Putin
Russian President
Shinzo-AbeShinzō Abe
Prime Minister of Japan
Related Stories
SpaceX launches another 60 Starlink satellites while setting two rocket reuse recordsSpaceX launches another 60 Starlink satellites while setting two rocket reuse records
Tesla stock soars as surprise profit answers skepticsTesla stock soars as surprise profit answers skeptics
Merkel Cheers VW’s Electric Push Amid Growing Climate CritiqueMerkel Cheers VW’s Electric Push Amid Growing Climate Critique
Latest News
I Sobbed Uncontrollably: The Moment Dads Truly Bonded With Their Kids'I Sobbed Uncontrollably': The Moment Dads Truly Bonded With Their Kids
Eco-Friendly Christmas Cards For A Greener Festive SeasonEco-Friendly Christmas Cards For A Greener Festive Season
The Best (And Worst) Christmas Sandwiches On The High Street – RankedThe Best (And Worst) Christmas Sandwiches On The High Street – Ranked
Is Getting Layered At Work An Automatic Demotion?Is Getting 'Layered' At Work An Automatic Demotion?
What Can You Actually Do If Youre Impacted By Medicine Shortages?What Can You Actually Do If You're Impacted By Medicine Shortages?
7 Amazing TV Political Debate Moments In Honour Of Tonights Head-To-Head Clash7 Amazing TV Political Debate Moments In Honour Of Tonight's Head-To-Head Clash
Irans Guards warn of decisive action if unrest continuesIran's Guards warn of 'decisive' action if unrest continues
Six killed as avalanche buries Indian patrol on disputed glacierSix killed as avalanche buries Indian patrol on disputed glacier
Sri Lankas Rajapaksa likely to re-boot China tiesSri Lanka's Rajapaksa likely to re-boot China ties
Still Ye: Kanye West and Dr Dre team up for Jesus Is King follow-upStill Ye: Kanye West and Dr Dre team up for Jesus Is King follow-up
Leaders
Donald-TrumpDonald Trump
45th President of the United States of America
Mike-PenceMike Pence
Vice President of the United States
Boris-JohnsonBoris Johnson
British Prime Minister
Angela-MerkelAngela Merkel
Chancellor of Germany
Emmanuel-MacronEmmanuel Macron
President of France
Justin-TrudeauJustin Trudeau
Prime Minister of Canada
Nancy-PelosiNancy Pelosi
Speaker of the United States House of Representatives
Barack-ObamaBarack Obama
44th U.S. President
Theresa-MayTheresa May
Member of Parliament of the United Kingdom
Vladimir-PutinVladimir Putin
Russian President
Shinzo-AbeShinzō Abe
Prime Minister of Japan
Police: 8 shot, 1 fatally, in latest Baltimore shooting
Model Tales Soares Dies After Collapsing On Catwalk At Sao Paulo Fashion Week
Glastonbury resale: What time are tickets on sale and how do I get them?
Elliott wins NASCAR race at Talladega
Tony Slattery: ‘I had a very happy time until I went slightly barmy’
'Game of Thrones' Gaze Turns South in Episode 4 Trailer
The universe is younger and expanding faster than we thought, a new study found and we may need new physics as a result
SpaceX and NASA close ranks after the mystery crew capsule incident as details remain scant
San Diego police identify synagogue shooting suspect – video
Bruins victory over Leafs ensures an American team will hoist the Stanley Cup
Mo Farah Finishes Fifth In London Marathon After Controversial Week
NASA's InSight Mission Detects Its First Marsquake
Putin: Maria Butina's sentence is 'lawlessness'
Donald Trump to withdraw US from Arms Trade Treaty
'Avengers: Endgame' Star Chris Evans for Men's Journal Magazine
Fake heiress Anna Sorokin found guilty after fooling banks and New York's elite
World Championship 2019: Mark Selby loses to Gary Wilson
Sam Donaldson Explains How Sarah Huckabee Sanders' Lying Is Unprecedented
Idris Elba marries Sabrina Dhowre in Morocco
‘Santa Clarita Diet’ Canceled After Three Seasons at Netflix
Facebook investigated by New York AG over email harvesting
Joe Biden Announces 2020 US Presidential Bid
Daniel Craig's final outing as James Bond will include Rami Malek as the bad guy
Parents of murdered AJ Freund, 5, ‘made him stand under freezing shower to punish him’
Stefanie Sherk, Actress and Wife to Demian Bichir, Dies at 43
NFL Draft 2019: Giants pick Daniel Jones, Dwayne Haskins LAUGHS and fans are shocked
Plan for Banksy art gallery in Port Talbot may be under threat
Lord of the Rings star in fiery CLASH with Caroline Lucas on BBC QT 'Our last GREAT hope'
Taylor Swift releases her new song 'ME!'
Lyra McKee funeral: politicians urged to seize the moment
The Greta Thunberg effect: her activism in London in two minutes - video
Jennifer Garner thinks her face on cover of People's Beautiful Issue is 'so ridiculous'
Rapper Bun B Shoots Armed Robber in His Houston Home
SpaceX Crew Dragon Accident Another Bump in the Road for Commercial Crew
Meghan Markle and Prince Harry wrote a sweet birthday message for Prince Louis, but some people think it broke royal protocol
Elon Musk told this Reddit user they 'should interview at Tesla', here's why
‘His career was incredible’. Billy McNeill was a winner as player and manager
Natalie Portman makes a surprise appearance at the Avengers: Endgame premiere
Seahawks, Chiefs blow up NFL draft with Frank Clark trade
Jared Kushner dubs Trump-Russia investigation 'a big distraction'
Vanessa Hudgens reveals why she is ‘grateful’ for her romance with Zac Efron
Tesla to Investigate Car That Appeared to Burst Into Flames in Shanghai
Stephen Graham says This Is England role nearly ended his acting career
Maisie Williams could show 'as much or as little' as she wanted in shocking 'Game of Thrones' sex scene
Sri Lanka Attacks: Asos Billionaire Loses Three Children In Easter Sunday Blasts
These 10 Democrats Want Trump Impeached
Rep. Seth Moulton Launches 2020 Presidential Bid
Why observe Earth Day on April 22?
Beyoncé lands $60M deal with Netflix
Tesla’s Elon Musk could earn up to $2.2 billion from stock options
Paris police use tear gas against 'yellow vest' protesters
Adele announces separation from husband Simon Konecki
Elizabeth Warren says House should start impeachment proceedings for Trump
Michelle Williams and her husband, musician Phil Elverum, have split
These Wisps Around Black Holes Could Reveal How the Cosmic Beasts Eat
'Boyz n the Hood' director John Singleton suffers stroke: report
Newcastle boss Rafa Benitez wants ONE thing to STAY - Michael Owen reveals what he's heard
Johnny Depp Allegedly Tried to Get Amber Heard Fired From Aquaman
Kourtney Kardashian's ex Younes Bendjima attends her 40th birthday party
Emma Thompson Joins Extinction Rebellion In Climate Change Protest
Lil Dicky drops the music video of his environmental anthem, 'Earth'
Dissecting Taylor Swift’s April 26 clues
The cause of the Notre Dame Cathedral fire remains unknown. Everything else is a rumor
Kathie Lee Gifford Reacts to Hoda Kotb’s Surprise Baby News
Westbrook vows to play better after loss
Mark Carney tells global banks they cannot ignore climate change dangers
Beyoncé's 'Homecoming' is as black as it can be
SpaceX loses Falcon Heavy's center booster to the sea
Why Netflix Has A 'Game Of Thrones' Problem
Trump Campaign Makes Minnesota An Early 2020 Target
Actor Lori Loughlin, other parents plead not guilty in U.S. college admissions case
Georgia Engel, who played Georgette on The Mary Tyler Moore Show, has died
Would you visit a 'fake' Notre Dame? You're already doing it at other sites
Russell Wilson and the Seahawks win with record extension
Coachella day three review: Ariana Grande on fire and Pusha T on an iceberg
Man, Woman, and Robot in Ian McEwan’s New Novel
Thousands join Extinction Rebellion protests across London
Hillsborough: Jury fails to reach verdict in David Duckenfield trial
Sarah Hyland Shows Off Her Toned Abs In Green Sports Bra While Hitting The Gym
Facebook investors launch desperate bid to oust Mark Zuckerberg
Uber IPO: Former CEO Travis Kalanick to earn billions
Chinese GP: Bottas Takes Pole For His 1000th F1 Race, Hamilton Finishes 2nd in Qualifying
BTS performed on SNL and fans went crazy
Interview with American Top Team’s Dustin Poirier who headlines UFC 236 for a title
The Perfect Date review: Netflix’s latest Noah Centineo movie is fine
Ariana Grande, who has opened up about PTSD, posts images of her brain scans on Instagram
Tesla Shifts Gears, Again, and Some Fans Are Losing Patience
Julian Assange arrest: justice or a threat to free press?
Annunziata Rees-Mogg to stand as MEP for Farage's Brexit party
Comedians pay tribute to Ian Cognito after standup dies on stage
Jaden Smith Shouts Out Nipsey Hussle, Rides Flying Car During Coachella Set
‘Guava Island’ First Look: Childish Gambino’s Mystery Project With Rihanna Is Unveiled
Is New Taylor Swift Music on the Way? Countdown Clock Suggests April 26 Release
Vasiliy Lomachenko defeats Anthony Crolla with fourth-round knockout
Katie Bouman, the MIT grad who made first-ever photograph of black hole possible
Trick or treat? EU, UK agree to delay Brexit until Halloween
Pavelski's painful goal sparks Sharks' take down of Vegas
Jane the Virgin's Latest Cliffhanger Creates Torture For Everyone
Good-bye glaciers: 390 billion tons of snow and ice melts each year as globe warms
Will Emmanuel Macron veto Theresa May's Brexit extension?
Farewell Fleabag: the most electrifying, devastating TV in years
Chris Davis sets record at 0 for 49, including warning track shot
Felicity Huffman to plead guilty in college admissions cheating case
Dean Ambrose’s Last WWE Match Becomes Brawl With Bobby Lashley
Twenty prison officers injured after violence at Feltham youth jail
Debenhams on brink despite Mike Ashley's last-minute offer
Humans are about to see the first-ever photo of a 'supermassive' black hole. Here what we hope to discover
At Least 6 People Shot in Chicago: Police
Pushing for Tighter Borders, President Asks Jews for Support
'Game Of Thrones' Castmates Turn Up To Ask 'SNL' Host Kit Harington How It All Ends
Charlie Rowley: Novichok victim meets Russian ambassador
Rapper Kodak Black accused of sexual assault: Prosecutor
Texas Tech's historic national title shot, courtesy of hero Matt Mooney
Prince Harry and Meghan Markle break Guinness World Record with new Instagram account
Lauren Sanchez Files for Divorce After Bezos Split Finalized
Judge orders Elon Musk and the SEC to settle Tesla tweet dispute
Trump's threat to close the border was just a trap for Democrats
Mick Jagger 'on the mend' following heart surgery
Britain starts issuing passports without 'European Union' on cover
Grand National 2019 sees awkward moment as six attendees wear same PrettyLittleThing dress
Falcon Heavy SpaceX Launch Will Mark First Commercial Mission
Kurt Cobain died 25 years ago today. A fan recalls seeing Nirvana play on the verge of fame
Lil Nas X Added Billy Ray Cyrus to ‘Old Town Road.’ Is It Country Enough for Billboard Now?
Tesla is selling fewer cars, but says it has ‘sufficient’ cash
Joker Trailer: First Look At Joaquin Phoenix As DC Villain In New Clips
Ohio teen tells investigators he's Timmothy Pitzen, child who disappeared in Illinois in 2011: report
Britney Spears reportedly checks herself into mental health facility
Bryce Harper embraces return to Washington
‘This Is Us’ finale ends season with a slew of new questions
Supermodel Amber Rose Announces She’s Expecting Her Second Child
‘Thrones’ actress Gwendoline Christie dazzles at NYC premiere
Trump lashes out at Democrats over Puerto Rico aid vote
Kim Kardashian reveals baby name she's considering for fourth child
Ernie Grunfeld fired as president of the Washington Wizards
Avengers Endgame tickets ballot opens for HUGE fan event in London: How to enter
Tania Mallet, Bond girl in 'Goldfinger,' dies aged 77
‘Keeping Up With the Kardashians’ Returns With Its New Star: Kanye West?
Rare glimpse into Saudi Aramco shows $111 billion net profit
Google adds Snake to Maps for April Fools' Day gag
Nipsey Hussle: Grammy-nominated rapper shot dead in LA
NASA Announces Successful Completion of ISS Spacewalk
Kylie Jenner Speaks Out About Jordyn Woods' Lip Kip Price Cut After Tristan Thompson Cheating Scandal
Saudis gained access to Amazon CEO Bezos' phone: Bezos' security chief
Brexit: Theresa May considers next step to break deadlock
Charles Leclerc pips Sebastian Vettel to Bahrain F1 pole on Ferrari’s day
Kash Ali disqualified for biting David Price in bizarre heavyweight bout
Attorney: NBA star Kristaps Porzingis is accused of rape
Suspect charged in slaying of University of South Carolina student Samantha Josephson
The Rolling Stones postpone U.S. shows, citing advice of Mick jagger's doctors
Purdue’s Carsen Edwards can match Steph Curry NCAA Tournament scoring mark
NASA will pay people $19000 to stay in bed for 2 months
Trump mocks Green New Deal, pokes fun at electric cars during Michigan rally
Texas Tech passes Michigan exam ... but bigger test awaits
Miami Open: Roger Federer reaches quarters, Simona Halep eyes No. 1 ranking
Anger and irreverence on the Brexit Day that wasn't
Justin Bieber Takes a Break From Music To Focus on Mental Health
Cardi B Is Defending Herself After A Video Showed Her Saying She Used To Drug And Rob Men: I Always Own My Shit
Conor McGregor reportedly under investigation for sexual assault
Jussie Smollett: Chicago mayor attacks 'whitewash of justice' as charges dropped
Ranking Roger Dead: The Beat And General Public Singer Dies, Aged 56
Mission Shakti, a long-desired capability tested
Vandals strike again: Downtown statue of Queen Victoria doused in green paint
Government could ignore indicative Brexit votes, says Liam Fox
Scott Walker, experimental pop hero, dies aged 76
Mel B Claims She Slept With Geri Halliwell During Spice Girls Era
‘Shazam!’ Film Review: DC Comics Gets a Bouncy Burst of Big-Screen Ebullience
Sydney Aiello, a survivor of the Parkland school shooting, dies by suicide
Larry Cohen, Writer-Director of 'It's Alive' and 'Hell Up in Harlem,' Dies at 77
Kylie Jenner Doubles Down On Being A 'Self Made' Billionaire
Robert Mueller report will be a gold mine of improprieties. Trump shouldn't celebrate yet
Brexit stitch up: Revoke Article 50 petition hits 4 million – could pass 5 million TONIGHT
Barbra Streisand criticized after saying experience 'didn't kill' Michael Jackson accusers
Persona 5: The Royal Announced for PS4
The Obamas Show Support For Jennifer Lopez and Alex Rodriguez's Engagement in the Sweetest Way
Trump to lift 'not necessary' North Korea sanctions, White House confirms
Historic Midwest flooding devastates Nebraska, Iowa
Brooke Henderson three back after opening round of LPGA Thailand
Prince Harry and Meghan Markle Honor New Zealand Shooting Victims
Mike Trout and LA Angels close to $430m deal, largest in sports history
Donald Trump suggests Brazil could join Nato as he meets Jair Bolsonaro
Here’s how you’ll access Google’s Stadia cloud gaming service
Will Jennifer Lopez Use a Cheating Clause in Her Prenup With Alex Rodriguez?
Chelsea Clinton Apologizes To Students Who Blame Her For NZ Attack
Australian Senator Fraser Anning punches teen after being egged
Lewis Hamilton responds to Valtteri Bottas message after Australian GP battle
Taylor Swift debuts pink hair at iHeartRadio Music Awards
Glastonbury 2019 Line-Up Announced With The Killers And The Cure Joining Stormzy As Headliners
Tesla Model Y: Musk's latest electric vehicle is almost here
'Avengers: Endgame' recruits a familiar face to save the world in new trailer: 'Whatever it takes'
Mosque attacks spark outrage, fuel concern over Islamophobia
New Zealand shooting: PewDiePie reacts after gunman named him before Christchurch attack
New Zealand Shooting: At Least 49 Dead After Massacre At New Zealand Mosques
Crew of Soyuz launch abort set for second try
Why a Kardashian-Jenner Biopic May Be in Our Near Future
Netflix confirms Madeleine McCann documentary release date
F1 race director Charlie Whiting dead
Triple Frontier Review: As They Say, Greed Is a Bottomless Pit
South Florida native Lamar Jackson records Instagram video of himself driving 105 MPH
The Tesla Model Y Is Coming, But Who Is Ready For It?
Frank Cali, alleged boss of New York's Gambino mafia family, shot dead outside his Staten Island home
Close