PALO ALTO, Calif. _ Tesla losses grew in the first quarter, blunting momentum as the electric vehicle maker moves to reach a broad new market with a lower-cost sedan.
The company topped analyst expectations for revenues but posted higher-than-expected losses. Revenues grew to $2.7 billion, up from the $1.1 billion posted during the same period last year.
Tesla reported first-quarter losses of $330 million, an increase of 17 percent from the same quarter last year. Tesla posted a net loss of $397 million, or $2.04 per share. Analysts predicted a $292 million loss, or about $1.17 per share.
Tesla stock dropped about 2.5 percent in Wednesday trading.
Karl Brauer, executive publisher for Autotrader and Kelley Blue Book, said the company is entering a major transition. The luxury car maker is expected to bring its lower-cost Model 3 to customers this year.
"The rest of 2017 will truly define the company's long-term viability," Brauer said.
Clement Thibault, senior analyst at Investing.com, said the long-term outlook for the company is still cloudy.
"Excitement and hype can only take a company so far," Thibault wrote in an email. "Tesla has a massive amount of debt with stable profitability only expected in 2020, and round after round of capital raising has already diluted shareholder value."
The electric vehicle maker shipped about 25,000 sedans and SUVs in the first quarter, setting a company record and a 64 percent growth rate year-to-year. The company expects to start production on the Model 3 in July. The $35,000 electric car is expected to bring Tesla to a broader market of customers.
Even as investors have boosted the stock, Tesla has faced recent criticism for its products and CEO Elon Musk's foray into Washington, D.C.
A handful of Model S owners have sued, claiming Tesla's updated Autopilot driver assist package is unsafe and delayed beyond the company's promises. The company denied the legal claims, saying owners are instructed on the system's limits and its scheduled roll-out.
Musk, serving on two presidential business advisory panels, has also become a lightning-rod for anti-Trump sentiment. A San Francisco tech investor launched a multi-million dollar campaign to get Musk to renounce President Donald Trump.
Several potential Tesla customers say on the website elondumptrump.com they have cancelled vehicle orders because of the tech entrepreneur's ties to Trump. Musk said he's raised immigration reform and climate change at the meetings, issues that might have otherwise been ignored.
The company also touted improved gross margin on auto sales, improvements to Autopilot and record vehicle deliveries during the first three months of the year.
