Tesla shares reverse as Elon Musk slashes prices again in an effort to boost demand
Aggressive price cuts have hurt Tesla’s profits.
The company last night reported a 24 percent increase in first-quarter sales to £19 billion as it made and sold more cars.
But profits fell 26 per cent to £2.2bn, fueling concerns that a series of price cuts instigated by boss Elon Musk is taking its toll.
Shares fell 4 percent in New York in after-hours trading, contributing to the 18 percent decline over the past six months.
Tesla built a record 440,808 electric cars in the first three months of the year and delivered 422.85 to customers – another record.
Showman: Elon Musk (pictured), one of the world’s richest men, admitted last year that the cost of the cars was ’embarrassingly high’
But Musk is lowering prices in an effort to further boost sales — despite the impact on earnings. Tesla will lower the price of its electric cars in the US for the sixth time this year.
The price of Model Y vehicles is reduced by £2,400 to approximately £37,743, and that of Model 3 by £1,600 to £32,100.
After a series of cuts, models in the US, the largest market, are 29 percent and 15 percent cheaper respectively than at the beginning of the year.
The cuts come less than a week after the Texas company announced discounts in some European markets, including Germany and France.
In January, it began cutting prices in China to boost demand. It later expanded it to Europe, Israel and Singapore, as well as Japan, Australia and South Korea, where prices were slashed by as much as 30 percent with immediate effect.
Industry insiders suggested that the price reductions were likely due to a fall in demand.
The rapid changes have sparked some backlash from motorists who say they’ve been ‘duped’ into early delivery of cars in December, weeks before the brand started cutting prices.
While Tesla’s price war has put pressure on electric start-ups like Rivian Automotive and Lucid Motors and traditional rivals like Ford and General Motors, it’s also sparked fears about the company’s industry-leading margins.
Musk has argued against these claims. We are not starting a price war. We’re just lowering prices to enable affordability at scale,” he said.