Tesla share price plunges after $408m loss despite record car sales

Company also announces departure of chief technology officer

Chief executive Elon Musk said Tesla expects to turn a profit in the last quarter of 2019 (AP)

Tesla has reported a bigger-than-expected loss of $408m (£327m) in the second quarter and said its chief technology officer JB Straubel will step down.

Despite a record delivery of 95,356 cars in the quarter, Tesla’s revenue also disappointed forecasts. The shares of the Palo Alto, California-based company fell more than 11 per cent in after-hours trading on Wednesday.

Chief executive Elon Musk said Tesla expects to break even this quarter and turn a profit in the last three months of 2019, after successive losses in the first half of the year.

Mr Straubel, a Tesla veteran who pioneered its electric batteries, will become a senior adviser. His departure completes the replacement of long-standing senior executives at the top of the company.

Mr Straubel will be replaced by one of his subordinates, Drew Baglino.

The maker of electric cars also said it began preparations for the production of its Model Y, an all-electric SUV.

When the model was unveiled in March, Mr Musk promised that it will ride “like a sports car” and will be “the safest mid-size SUV in the world by far”.

The Model Y may become Tesla’s most important money spinner, given how popular SUVs have become in the US, Europe and Canada. Most SUVs still run on petrol, leaving Tesla to cater to consumers looking for an all-electric alternative.

The pressure on Tesla to become sustainably profitable is intense. Repeated large losses since its inception and capital raising have left the company with a huge debt pile: it stood at $11.4bn at the end of the second quarter.

Whether Tesla will move into the black this year is in doubt – many analysts think it will struggle to meet its 2019 deliveries target of 360,000 to 400,000 vehicles.

The US has reduced its tax incentive for electric car purchases and will phase it out entirely at the end of the year.

But Tesla faces an even deeper problem, as Clement Thibault, an analyst at Investing.com, pointed out. “Does it matter how many cars you sell, if you can’t make a profit on them?”

Tesla’s shares have lost more than 20 per cent of their value this year, while the Standard & Poor’s 500 index has surged by as much.

Additional reporting by agencies