Status: 04/20/2023 09:24 am
Tesla boss Elon Musk has reacted to the increasing competition in the electric car industry with an aggressive pricing policy. The high discounts have now caused the US manufacturer’s profit to shrink sharply.
The electric car business has become more difficult and the competition tougher. Electric car pioneer Elon Musk also felt this. Musk therefore changed Tesla’s pricing policy in the first quarter and offered high discounts. The aim of his strategy is to make electric cars more affordable for more customers and thus boost sales.
In fact, Tesla recorded a jump in sales in the first quarter, according to the quarterly report that the company released last night after the US market closed. Accordingly, the proceeds grew by 24 percent to 23.3 billion dollars. In addition, Tesla recorded record sales of 422,875 electric cars.
Tesla disappoints with falling margin
However, the US group fell short of the analysts’ expectations with both indicators. And that’s not all: Elon Musk’s aggressive pricing policy has had a massive impact on the electric car manufacturer’s profits. Bottom line, Tesla made $2.5 billion in the three months ended March, down 24 percent from a year ago.
The focus of investors in this quarterly report was precisely on this: Will Tesla manage to defend its impressively high margins despite the growing competition in the electric car market?
The answer is: no. The so-called gross margin, which indicates the ratio of gross profit to sales, fell to 19.3 percent, which is the lowest value since 2020. Tesla still has the highest profits and margins in the industry. But it fell well short of the Wall Street consensus of 21.4 percent.
stock collapses
Investors are correspondingly disappointed, with Tesla shares slipping 6.1 percent to $169.65 in after-hours trading. Since its low of $101.81 at the beginning of January, the share has recovered significantly and at times more than doubled to a high of $217.65. Recently, however, the recovery rally had stalled.
After presenting the numbers, Musk said he thinks it’s the right strategy to go for higher volume rather than lower sales and higher margins. The price war in the electric car industry has probably not yet reached its peak.
Analysts expect further discounts, including at Tesla: “Even though many investors hope that margins have hit their lows in the first quarter, we do not believe that this will happen, especially since further price reductions are likely,” write the Bernstein experts . That, in turn, should make it difficult for Tesla stock to resume its uptrend in the coming months.
With information from Angela Göpfert, tagesschau.de.