So, Elon Musk, the man who wants to colonize Mars, has decided that Tesla should cut prices on its electric cars, even if it means sacrificing their profit margins.
He claims this move will help increase demand and give Tesla an edge over its competitors. But some investors are skeptical and have sent the company’s stock price plummeting.
The price cuts have been so drastic that the base price of the Model 3 has dropped below $40,000 for the first time in years. This has obviously affected Tesla’s income, with operating margins dropping to 11.4% in the first quarter compared to 16% in the previous period and 19.2% last year.
But don’t worry, Tesla’s CFO says they have plenty of wiggle room before they need to worry about it. Despite the slump, Tesla’s margins are still higher than other automakers, such as General Motors and Ford Motor Co.
But Tesla’s revenue did rise 24% to $23.33 billion in the first quarter, though profit did fall slightly below expectations.
Musk claims that Tesla is still on track to deliver about 1.8 million vehicles this year, even though they’re currently sitting on excess inventory of about 18,000 cars.
But hey, Musk says orders are outpacing production, so everything’s fine, right?
Source: https://www.herald.co.zw/tesla-still-cutting-prices-as-it-protects-lead-in-evs/