Why did Tesla lose money?

Typically, a big jump in deliveries means a carmaker is doing well and minting money. But that was not the case for Tesla because it is spending heavily. The company is building a plant in China, which it said should begin producing the Model 3 by the end of the year. It is also developing several vehicles and making improvements to its customer service.

Its record sales in the second quarter came at a cost: Tesla pumped up demand in part by cutting prices. The most recent cut was last week, when it lowered the price of the most affordable version of its Model 3 sedan by $1,000, to $38,990.

It’s unclear how much money, if any, Tesla makes on the lower-priced versions of the Model 3. All told, the sedan made up more than 80 percent of the company’s deliveries in the second quarter.

“The Model 3 hasn’t reached a combination of sales volume and price that produces profits,” said Erik Gordon, a business professor at the University of Michigan who follows Tesla. Investors have to worry about whether it can reach a profitable combination, he added.

“The good news is the cash flow picture,” he said. “The company is not about to run out of cash.”

Are people still buying the Model S and X?

A big problem for the company is that demand for its more expensive, and more profitable, Model S luxury sedan and Model X sport utility vehicle has fallen sharply this year.

In the second quarter, combined sales of the Model S and X totaled about 17,700. That was about 5,600 more than in the first quarter but 10,000 fewer than it sold in the last three months of 2018.

“It is obvious the appetite for the Model S and X is not that strong,” said Shane Marcum, general manager of the Cross-Sell Reports, which tracks registrations of new cars in 23 states. “The Model 3 is cannibalizing sales of the S and X.”