Shares of Tesla (TSLA) were sharply lower in recent trade on Thursday, the morning after the electric car-manufacturer trimmed its full-year capital expenditure guidance amid second-quarter results which fell short of analysts' expectations. The decline was driven by the lower average selling price of the company's vehicles, as deliveries of the Model 3 more than quadrupled the combined total for the costlier Model S and X.
Straubel, 43, has overseen Tesla's energy business, its Supercharger network and its battery plant in Nevada. In an interview with Recode the same month, Tesla's billionaire CEO said that "everyone" at the company worked 100-hour weeks at times.
There is a silver lining in this report as Tesla has generated $614 million of free cash flow (operating cash flow less capex) in Q2. Tesla founder Elon Musk also announced that current CTO JB Straubel is stepping down and will now work in a senior advisor role.
Still, the departure rattled Wall Street after Tesla delivered greater-than-expected losses and warned that it would putting the emphasis less on profit and more on volume growth, increasing production capacity and generating cash. In January this year, Musk laid the foundation of Tesla Gigafactory in Shanghai - the first-ever outside the USA - that is expected to produce 500,000 electric vehicles per year and double the production capacity. "To which, Musk said it is probably going to happen in a year's time", IIT Madras said in a statement on Friday. "Given that Tesla hit its stride in the back half of a year ago, it's essential that the company finds some way to keep this sales momentum going if it wants to prove to investors it's on the right track".
Although it's unclear if he will take over the role permanently, Vice President of Technology Drew Baglino will assume Straubel's responsibilities. That's because the US has reduced its tax incentive for electric auto purchases, which will be phased out entirely at the end of the year. During the call, he attempted to clarify that "this was not some. lack of confidence in the company or the team or anything like that".
Even if Tesla realizes its objectives, "Does it matter how many cars you sell, if you can't make a profit on them?" wondered Clement Thibault, an analyst at Investing.com. Though it cut the starting price for the Model 3 in February, the average selling price for the vehicle remained stable in the second quarter at around $50,000 and manufacturing costs declined, Tesla said.
According to Tesla, the Model 3 was once again the best-selling premium vehicle in the US.
Safety experts have anxious about Tesla's claims about self-driving cars.