Tesla Inc's chief financial officer will leave the company as the automaker promised cheaper Model 3 sedans, the launch of Chinese production this year and profits in every quarter in 2019.
The departure of Deepak Ahuja as well as missing Wall Street profit targets for the end of 2018, sent Tesla shares down nearly 6 percent after hours. Zach Kirkhorn, Tesla's vice president of finance, will replace Ahuja who is about 56 years old.
Chief Executive Elon Musk touted strong demand for the Model 3 as the company begins to ship the car to Europe and Asia from its Fremont, California factory. But he acknowledged it was paramount to cut costs to lower the price of the vehicle for a wider customer base.
"We have to be relentless about costs in order to make affordable cars and not go bankrupt," said Musk on a conference call with analysts.
While the company expressed optimism that it could post a profit in the first quarter despite fewer deliveries of its flagship S and X vehicles, Tesla warned of challenges such as logistics and global deliveries of its new Model 3.
Tesla said plans to lower the price of the Model 3 were contingent on quickly building its factory in China. It hopes to produce 500,000 vehicles a year there by the last quarter of 2019 and the second quarter of 2020, a goal it originally expected to meet in 2018.
To start, the Shanghai factory will build 3,000 Model 3s per week while production at Tesla's Fremont plant will rise to 7,000 Model 3s per week by year's end, the company estimated.
"Bottom line is we need the Shanghai factory to achieve that 10,000 rate and have the cars be affordable. The demand for Model 3 is insanely high. The inhibitor is affordability," Musk told analysts.
Musk announced a 7 percent workforce reduction earlier this month, saying it was crucial to cut costs to roll out a lower-priced yet still profitable, Model 3. The cheapest today is priced at $44,000. Musk gave a "rough guess" that Tesla would begin building its originally promised $35,000 version around the middle of this year.
Roth Capital Partners analyst Craig Irwin called Tesla's results "somewhat weak, but largely as expected."
"We think people have been too bullish about Tesla showing earnings power and sustained positive cash from operations," he said.