Tesla Motors just reported its second-quarter earnings, and the news is anything but positive: The company lost $408 million in Q2, even after selling a record number of cars. Pundits on all sides are now divining further meaning from the company’s continued losses.

During the first quarter of 2019, Tesla lost $702 million, and the company lost $742 million in the second quarter of 2018. Today’s report is indeed a substantial improvement on both of those numbers, but still show a company that is burning money at a prodigious rate. Wall Street was expecting a loss per share of .40 cents — instead it got a loss of $1.12 per share. Revenue was expected to be $6.41 billion, but the company only recorded $6.35 billion.  That is a rude awakening any way you slice it, and the stock price has tumbled 11% in after-hours trading.

This latest disappointment comes hot on the heels of very good news for the electric car maker. Just 22 days ago, we reported that Tesla sold a record number of cars, particularly the Model 3. And therein lies the rub. The Tesla Model 3 is the least expensive model in the Tesla lineup. A truism of the automotive industry is that most of the profit is made on the highest-priced cars. Many automakers just squeak out a profit on their entry-level offerings. So while Tesla is posting record sales of 95,200 in just one quarter, they are sales of the car that least boosts the balance sheet.

The company is still publicly planning to sell 360,000 to 400,000 cars throughout 2019, and so far that number sits at 158,200. With the first half of the year now in the books, Tesla will have to deliver more than 200,000 over the rest of the year to meet it’s target.

The automaker is currently beset on all sides. By owning its own stores, it faces additional costs to keep them open and staffed. Most major automakers are planning on releasing their first electric vehicles within the next 12 months.

The federal tax credit that buyers receive for purchasing a Tesla has now fallen from $3,750 to only $1,875, while all of its electric competitors still qualify for the full $3,750 credit. Service times and fit-and-finish complaints have continued to dog the firm. Finally, the company just dropped some model variants and cut prices on others to keep sales momentum going on their higher-priced and higher-margin offerings.

Making cars is a very tough business, and there is still doubt if Tesla can survive. Regardless if this is a momentary setback or a continuing trend, some investors are smelling blood in the water. The next 12 months will be a very interesting, and very competitive, time for the EV pioneer.