Tesla helped kick off an EV price war. Now, those lower prices are hitting the company’s sales and profits.
Tesla, which has cut prices on its electric vehicles four times in the quarter and twice so far this month, earned $2.9 billion excluding special items, down 22% from a year ago. Profits fell even more compared to the third and fourth quarters of last year. The lower prices caused revenue to fall $1.3 billion compared to the fourth quarter despite record deliveries, leading to tighter profit margins. Tesla reported a gross profit margin of 19.3%.
Some, including Ford\n \n , have followed by cutting the price of the Mustang Mach-E, one of its key EVs. Others, such as General Motors, have announced plans for EV models that will be less expensive than the cheapest Tesla model. But Tesla is also facing headwinds from broader economic conditions, said CEO Elon Musk on a call with investors. “It is worth pointing out that the current macro environment remains uncertain,” he said.
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