Elon Musk Indicates Further Tesla Price Cuts Amidst Global Economic Uncertainty.
Tesla’s CEO, Elon Musk, has suggested that the electric carmaker will continue to reduce prices due to the current turbulent state of the world economy. This statement comes after the company faced tough competition, leading to squeezed profit margins.
Over the past few months, Tesla has implemented price cuts in significant markets, including the US and China. As a result of the news and market concerns, the company’s shares declined by over 4% in after-hours trading in New York.
Tesla reported that its gross profit margin for the three months ending in June dropped to 18.2%, the lowest level in four years, down from 26.2% during the same period last year. During a call with Wall Street analysts, Musk expressed openness to further price reductions if required, emphasizing the unpredictable nature of the world economy.
Investors are worried about the potential for more price cuts at Tesla, with concerns raised about a possible price war without a clear long-term strategy to raise profit margins if Tesla emerges as the winner. Earlier, Musk had defended pursuing higher sales at the expense of lower profits as the right approach for Tesla.
To stay competitive and compete with rival manufacturers, Tesla has already lowered prices in markets like the US, UK, and China. The company recently announced delivering a record number of vehicles in the three months ending June. Furthermore, more carmakers, including Nissan, Ford, and General Motors, have agreed to adopt Tesla’s electric vehicle charging technology, making electric mobility more accessible. Nissan plans to equip its EVs in the US and Canada with Tesla-developed charging ports from 2025, as part of their commitment to supporting electric mobility.
