Tesla shares drop after co-founder's departure and disappointing earnings

Musk Completes Dizzying 360 Degree Turn on His Plan for Tesla’s RetailMore

"We have to make cars more affordable", Musk conceded during the conference call.

While Tesla posted profits in the second half of past year, 2019 has been turbulent.

But despite improvements, at just over 158,000 cars shipped Tesla remains less than halfway to its target of 360,000 to 400,000 deliveries in 2019, according to the Times, and the continued phaseout of a US federal electric vehicle tax credit (down from $US3750 ($5374) to $US1875 ($2687) as of July and disappearing entirely at the end of the year) may hurt demand.

A number of analysts were also concerned by the resignation as chief technology officer of the pioneer of the company's electric batteries, J.B. Straubel, the last of the company's old guard left in its top echelons outside Musk himself.

Commenting on his departure, Straubel on the call made a point of emphasizing that he remains optimistic about Tesla's future prospects.

But just reaching the lower-end of Musk's car-delivery goal for this year may prove hard. He said Tesla is counting on selling more lower-priced Model 3s to make money, but posited that the auto "may be structurally unprofitable".

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In a shareholder letter released with its second-quarter result, Tesla said it will focus more on increasing its manufacturing capacity and its deliveries of cars instead of hitting a specific financial target. The nasty surprise helped push Tesla shares down almost 14% to $228.82, their worst day since 2013. Tesla said it had been beset by delivery and logistics issues in its markets in Europe and China, a factor that pushed deliveries to the early part of the second quarter. Now profit is expected in the fourth quarter of 2019, with the current quarter to be break-even, Musk said.

Shares of Tesla Inc sank 11% on Thursday, on course to knock more than $5 billion off the electric carmaker's market value, a day after it disappointed Wall Street by softening its language on turning a profit this year.

Despite falling short of expectations, Tesla reaffirmed full-year delivery guidance stating that the company still believes it will sell 360,000 to 400,000 vehicles in 2019 mostly consisting of Model 3 sedans.

"I'm not disappearing", Straubel said, "and I just wanted to make sure that people understand that this was not some, you know, lack of confidence in the company or the team or anything like that".

With Straubel stepping down, Tesla veteran Drew Baglino will assume the CTO position. "The best service, really, is no service", Musk said.

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