11:09 am, October 19, 2023
Tesla has announced a slump in profits of 44% as price cuts for its popular Model 3 and Y hit earnings.
Despite a rise in revenue for the third quarter of 9% to $23.35bn, Tesla’s profit fell to $1.85bn, down 44% on the same period last year.
The earnings fell well short of analysts’ predictions with new vehicle sales of 435,059 achieved in the July-September period. Experts had been expecting 461,000 sales.
Tesla has been aggressively cutting the prices of its new cars across the world to stimulate demand in the face of falling consumer confidence.
Two days ago it slashed the price of a Model 3 again in the UK – this time by £3,000 – so the range now starts at £39,995.
The first cut in January lowered the car’s RRP to below £50,000 and sparked prices of used models to freefall.
The latest round of price cuts have hit Tesla’s operating margin, which represents how efficiently sales are turned into pre-tax profits, down to 7.6% in the third quarter. That is fall from 17.2% in 2022.
Despite missing targets, Tesla said it will stick to its annual sales goal of 1.8m cars.
To achieve this, some analysts believe further price cuts will have to be introduced especially in the face of waning interest in new EVs.
New electric vehicle sales to private buyers dropped 14.3% in September with less than one in 10 new car buyers opting for an EV, according to figures from the SMMT.
Tesla’s earnings per share fell to 53 cents from 95 cents for the third quarter, compared to last year.
Its shares closed 4.8% lower yesterday, but were up 2% in after-hours trading following the release of the earnings report.
