Tesla has released its financial results for the first quarter of 2019, with the company recording a loss of USD702 million. This comes after back-to-back profitable quarters (Q3 and Q4) to close out 2018.

In Q1 2019, Tesla’s revenue stood at USD4.54 billion, which is considerably less than the USD7.22 billion it achieved in the three months ended December 31, 2018. However, the figure is higher than the USD3.41 billion is recorded in Q1 2018.

Revenue from automotive sales in Q1 2019 (USD3.51 billion) is less than half of Q4 2018 (USD6.07 billion), with many analysts attributing the dip to the phase-out of federal tax credits from January 1, 2019 after Tesla reached the threshold of 200,000 electric vehicles sold in July 2018.

Tesla’s cash reserve was also diminished to USD2.2 billion from USD3.69 billion at the end of 2018, with the company attributing this to a USD920 million convertible bond repayment and USD640 million used for its operations.

Looking at the company’s line-up of vehicles, production and deliveries of the Model 3 for overseas markets began in Q1 2019, which resulted in 62,975 units being made in the aforementioned quarter, which is more than the 61,394 units produced in Q4 2018.

However, Model 3 deliveries stood at just 50,928 units, less than the previous quarter’s 63,359 units. According to Tesla, the comprehensive rollout of the Model 3 to the United States, China and Europe meant that even short delays caused some deliveries to be deferred to Q2.

Meanwhile, deliveries of the Model S and Model X slumped to 12,091 units from 27,607 units in the previous quarter, with the company citing the phase-out of federal tax credits and discontinuation of the 75-kWh battery pack variants as reasons. The latter also resulted in a rush by customers to secure units, causing the take rate to exceed what the company could supply.

This isn’t helped by the update to the Model S and Model X production line to accommodate newer powertrains, which saw production of both models drop to 14,163 units from 25,161 units in Q4 2018.

In terms of outlook, Elon Musk is aiming to hit 360,000 to 400,000 deliveries in 2019, which represents an increase of 45% to 65% compared to 2018. The Tesla CEO is also hoping Gigafactory Shanghai reaches volume production early in Q4 this year, so Tesla will have the ability to produce up to 500,000 vehicles globally in 2019.

As for capital expenditure, Musk expects up to USD2.5 billion to be spent on increasing capacity and develop new vehicles, covering projects such as Gigafactory Shanghai, Model Y and Tesla Semi, as well as for the expansion of its Supercharger and service networks.