Tesla CEO Elon Musk does not expect the electric car maker to turn a profit in the first quarter, he said on Thursday.
He based his expectations on one-time charges and other financial commitments, and added that he does expect the company to be profitable in the second quarter.
“Given that there is a lot happening in Q1, and we are taking a lot of one time charges, there are a lot of challenges getting cars to China and Europe, we do not expect to be profitable. We do think that profitability in Q2 is likely,” Musk said.
Shares fell more than 3 percent Thursday night.
The revelation came on a media call where Tesla announced it will sell is long-promised $35,000 version of the Model 3 mid-size sedan. One analyst called the lower price a mistake, and suggested it would hurt margins.
“We think it’s a mistake from a strategic perspective and are skeptical of the gross margins on that $35,000 vehicle. In our view, they would be better served sticking to premium electric vehicles instead of this mass market, Henry Ford-type mentality of affordable vehicles for all,” said Garrett Nelson from CFRA. “It might be different if Tesla had the production capacity to drive volume and margin for this lower priced version, but they don’t currently and to add the incremental capacity would require significant additional capital investment.”
The company also said it would be taking all sales online, and acknowledged that some jobs in its retail group would be eliminated as a result.
WATCH: Tesla launches $35K Model 3 with shorter range, new interior
