Tesla shares fell 8 percent Friday, a day after the electric car maker said it will be shuttering some stores and cutting jobs to reduce costs.
CEO Elon Musk also said Tesla won’t turn a profit during the first quarter as it works to deliver its mid-size Model 3 sedan at a more affordable price tag of $35,000.
“Given that there is a lot happening in Q1, and we are taking a lot of one time charges, and there are a lot of challenges getting cars to China and Europe, we do not expect to be profitable in Q1,” Musk said on a call with reporters Thursday evening. “We do think that profitability in Q2 is likely.”
The release of the cheapest Model 3 so far has elicited a range of reactions from investors. Some analysts say the move is ultimately a step Tesla must take to fulfill its goal of becoming a major automaker, but others worry the car will cut too deeply into Tesla’s profits.
The store closures are part of a push to slash costs as much as possible to ensure the lowest-priced version of the car makes money.
“There’s no way around it,” Musk said on the call.
Musk reversed Wall Street guidance Thursday in predicting a loss for the first quarter, one month after saying he was optimistic the company would be profitable. He added that he still expects Tesla to make money in the second quarter.
WATCH: Tesla launches $35K Model 3
