Elon Musk, CEO of Tesla Inc (TSLA.O), announced on April 19 that the company would prioritize sales growth over profit in a weak economy. Tesla
On April 19, Tesla Inc's CEO Elon Musk reiterated his commitment to a price war he started at the end of last year, stating that the electric vehicle (EV) maker would prioritize sales growth over profit in a weak economy.
The company's quarterly gross margin was its lowest in two years, falling below market expectations, due to aggressive price cuts in markets such as the United States and China to stimulate demand and counter increased competition. Following this, shares of the Texas-based automaker plummeted by 6% in after-hours trading. Musk, who had previously expressed his desire to achieve 2 million vehicle deliveries this year, declined to reassert that goal but stood by the company's official target of 1.8 million deliveries.
Jesse Cohen, a senior analyst at Investing.com, noted that Tesla's China sales figures were concerning, indicating that demand for its cars was slowing down more than expected amid rising competition from local EV companies.
However, Tesla claimed that its operating margin would remain the highest among major automakers, even though it fell short of market expectations. Tesla did not report its automotive gross margin, which investors closely monitor, due to the uncertain economic climate.
In the first quarter, the company posted an automotive gross margin of 19% excluding regulatory credits, down from 24% the previous quarter, according to Reuters' calculation. Tesla also confirmed that its average selling price had decreased in the first quarter compared to the previous year.
