By Guy Taylor
Tesla reported third-quarter profit nearly halved as Elon Musk’s aggressive price-cutting strategy continues to weigh down the company’s bottom line.
The US-based electric carmaker made $1.85bn (£1.53bn) between July and September, a 44 per cent decline on the same period a year earlier.
Operating margins, a separate measure of the company’s profitability, also fell from nearly 10 per cent in the last quarter to 7.6 per cent.
Price cuts helped drive sales growth by 9 per cent, particularly of its primary Model Y and Model 3 vehicle, resulting in a revenue jump of 9 per cent to $23.35bn.
But in a dissapointing set of results, both revenue and net income figures missed Wall Street analyst expectations, and shares were trading down nearly 5 per cent when US markets closed.
Tesla has been aggressively slashing prices throughout the year, in a bid to keep ahead of an increasingly competitive electric vehicle (EV) market worldwide.
The Texas-headquartered firm said in the announcement that objective “remained unchanged”.
“While production cost at our new factories remained higher than our established factories, we have implemented necessary upgrades in Q3 to enable further unit cost reductions. We continue to believe that an industry leader needs to be a cost leader.”
Tesla announced yesterday it would slash the price of its entry-level Model 3 in the UK by £3,000.
Musk’s outfit began cutting prices in January, with a focus on China, as it races to stay ahead of a slew of rapidly expanding electric carmakers, such as BYD, who are looking to oust traditional European competition.
Interest rate rises across the Western world have also tempered demand from buyers, with consumers hesitant to make the expensive switch to an electric make amid a challenging macroeconomic backdrop and rising energy costs.
In a downbeat earnings call following the announcement, Musk said he was “worried about the interest rate environment we’re in”, while tempering production expectations for its long-awaited Cybertruck model.
