Tesla Inc warned on Wednesday it will need to begin building cars in China and lower the price of its Model 3 sedan to make money in every 2019 quarter, as it failed to meet Wall Street profit expectations at the end of 2018, Trend reports citing Reuters.
The company also announced that its chief financial officer, Deepak Ahuja, would retire, extending a slide in shares after hours to 4 percent.
Wednesday’s results offered a mix bag for investors as the company both expressed optimism that it could post a profit in the first quarter despite fewer deliveries of its flagship S and X vehicles, while warning of challenges such as logistics and global deliveries of its new Model 3.
Tesla is beginning to ship its Model 3 to Europe and Asia from California. To cut costs and transit times, Tesla plans to build a factory in China. It hopes to produce 500,000 vehicles a year there by the last quarter of 2019 and the second quarter of 2020, a goal it originally expected to meet in 2018.
Musk announced a 7 percent workforce reduction earlier this month, saying it was crucial to cut costs so that the company could roll out lower-priced versions of its Model 3.
The cheapest Model 3 today is priced at $44,000 but Tesla hopes to get the cost down to $35,000.
Tesla said on Wednesday that Model 3 production volume at its Fremont, California factory would ramp up, ultimately reaching a long-promised 7,000 units per week by the end of the year.
Roth Capital Partners analyst Craig Irwin called Tesla’s results “somewhat weak, but largely as expected,” and expressed disappointment that the company did not announce it would soon begin building a $35,000 version of its Model 3.
“We think people have been too bullish about Tesla showing earnings power, and sustained positive cash from operations,” he said.
In a surprise announcement at the end of a conference call with analysts, Musk said CFO Ahuja would be replaced by Zach Kirkhorn, who has been at Tesla for nine years.