Jul 19, 2023 - Economy
Tesla margins squeezed by price cuts
Add Axios as your preferred source to
see more of our stories on Google.
Tesla's price cut strategy has boosted sales amid growing competition and a global EV price war, but it's also squeezed profitability.
Driving the news: The company's gross margins fell to 18.2% in the second quarter, continuing a decline that began about a year ago and coming in below analyst expectations of 18.8%.
- Separately, operating margins fell to 9.6% in the second quarter, down from 14.6% in the same period last year and a smaller decline from 11.4% in the first quarter.
- Total sales, meanwhile, rose 47% to $24.9 billion.
What they're saying: A reduction in average sales price and an increase in operating expenses toward producing its Cybertruck and investments in AI contributed to declining margins, the company said in its earnings presentation.
What to watch: "Even after months of markdowns, Tesla is still making more cars than it's selling," Bloomberg notes.
- Global inventory is now 16 days of supply, up one day from last quarter and 12 days from a year ago.
Go deeper
