Tesla profits fall for the first time since 2019 after Musk cut prices

Tesla has advised investors that further price cuts may occur in the future. Credit: REUTERS/Aly Song/File Photo

Tesla's quarterly profit fell for the first time since 2019 after CEO Elon Musk slashed prices in an attempt to sell more cars.

The company reported a 24% drop in profits. percent and informed investors that further price cuts may occur in the future.< /p>

In recent months, Tesla has repeatedly cut prices amid growing competition between well-known car companies and Chinese upstarts, which has reduced the profits it makes from each car.

Despite the fact that the company achieved record sales in the first quarter of the year, lower prices led to a drop in profitability.

Profit fell to $2.5 billion (£2 billion) from $3.3 billion a year ago, while revenue rose 24 percent from $18.8 billion to $23.3 billion.

Tesla said it expects to challenge competing automakers on price to cut their business and make more money from other services.

0604 Tesla Boom

economics of our [electric vehicle] programs, we are committed to leveraging our position as a cost leader,” Tesla said.

“Our immediate plans The pricing strategy takes into account a long-term view of the profitability of each vehicle, considering the potential lifetime value of a Tesla vehicle through autonomy, supercharging, connectivity and serviceability. We expect the prices of our products to continue to evolve, rise or fall, depending on a number of factors.”

The world's most valuable automaker said it expects to further reduce the cost of manufacturing its electric vehicles. Mr. Musk said he wants to bring a truly massive $25,000 car to market.

Tesla opened factories in Texas and Berlin last year, and recently announced a new plant in Mexico.

Last year, Musk lost his place as the richest man in the world to French tycoon Bernard Arnault. Tesla shares have fallen due to increased competition, although they have rebounded in recent months.

The company has already reported that it sold a record 422,875 vehicles in the first quarter of the year.

Tesla's results came after how it cut US prices for the sixth time this year. She reduced the price of her cheapest Model 3 car to $39,990 (£32,126), down $2,000, and reduced the price of her Model Y family car by $3,000 to $46,990.

The company has previously hiked prices repeatedly in 2021 and 2022 as automakers suffered from microchip shortages and other inflationary pressures.