Oct 18, 2023 - Economy

Tesla's dramatic price cuts

Data: Kelley Blue Book; Chart: Axios Visuals
Data: Kelley Blue Book; Chart: Axios Visuals

Elon Musk has been using price cuts to drive demand as competition grows. And some investors think more cuts will be needed.

State of play: Tesla's average transaction prices are now already lower than luxury market brands Acura, Lexus, Infiniti and Volvo, according to a Kelley Blue Book report from last week.

  • Industry prices fell 0.7% year-over-year due to higher inventory levels and greater incentives.

The big picture: Tesla needs to deliver about 475,000 vehicles in the current quarter to reach its goal of 1.8 million cars this year.

By the numbers: The company saw sales of $23.4 billion and earnings of 66 cents per share adjusted. Analysts were anticipating about 73 cents and revenue of $24.1 billion, according to Refinitiv.

  • Tesla's gross margin — a key focus now amid continuing price cuts — fell to 17.9% from 18.2% in the second quarter and was markedly down from 25% in Q3 of last year.
  • Wall Street was looking for margins to come in at a range of 17% to 18%.

Editor's note: Cox Automotive owner Cox Enterprises owns Kelley Blue Book and Axios.

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