by Tesla discount on the company’s earnings call.
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- Elon Musk was very upset about Tesla’s recent price cut during the automaker’s earnings call.
- Musk said Tesla can sell its products at “zero profit” due to future output from its autonomous technology.
- The company has slashed prices six times this year, and its profit margins have fallen as a result.
Investors and analysts questioned Elon Musk about Tesla’s recent price drop during the company’s earnings call on Wednesday.
The Tesla CEO answered more than half a dozen questions around the company’s recent price cuts and their impact on the electric carmaker’s profit margins during the call.
The company has reduced the price six times this year. Just this week, Tesla discount for some of it Model Y And 3 . sample vehicles are $3,000 and $2,000, respectively.
Tesla owners and investors both have no positive response to the price reduction. In the first quarter, Tesla’s auto sales fell more than $1.3 billion from the previous quarter, even as the automaker made record deliveries. Gross profit margin decreased just below analyst expectations to around 19.3%, with analysts blaming the drop in prices.
Tesla signaled in its report that it could cut prices even further. Musk told investors that he believes Tesla could technically even sell its cars for “zero profit” and that the company could instead make money in the future through the software. its own autonomous software.
“We made the point that driving higher volumes and larger fleets was the right choice here versus lower volumes and higher margins,” Musk said on the call. “However, we hope our vehicle over time will be able to generate substantial profits through autonomy. So we believe we’re like laying the groundwork here, and then it’s better to ship a large number of cars at a lower profit and then collect that profit in the future when we perfect autonomy.”
musk has speak out against claims that the electric carmaker has launched a price war with traditional car manufacturers in the past.
“We’re not trying to take pricing actions to intentionally weaken a competitor or anything like that, for example,” Musk said on Wednesday’s call. “We really don’t think much about our competitors.”
Shares of Tesla have fallen about 10% since the company announced earnings on Wednesday. Wedbush . analyst Dan Ives said in a note told investors that the automaker’s margins “are keeping Tesla investors awake.”
“Elon Musk is using price as a tool against competition,” former Ford CEO Mark Fields told CNBC. “He’s doing it because he has a positive margin on electric vehicles relative to the competition, which may not be. When you consider using price to increase demand, you have to ask ‘you’ How much can it be reduced?'”
