Tesla’s Profit Rose in the Second Quarter as Price Cuts Spurred Demand
“We don’t control the macroeconomic conditions,” he said during a conference call with analysts and investors. “If macroeconomic conditions are stable, prices will remain stable. If macroeconomic condition are not stable, we would have to lower prices.”
Tesla shares were down about 4 percent in extended trading on Wednesday.
An intensifying price war is making electric cars more affordable but putting pressure on profits across the industry. Wait times for delivery of vehicles have evaporated, and dealers that sold cars with hefty markups a year ago are now offering discounts of thousands of dollars.
Tesla is one of the few companies that make money on electric vehicles, and it dominates the U.S. and European electric car markets. As a result, the company is in a stronger position than other automakers that are losing billions of dollars on electric cars.
But Tesla has had to sharply cut prices to lure buyers and defend its market share, leading to a lower profit margin on car sales. The company made 59 percent of the electric cars sold in the United States in the second quarter, down from 65 percent a year earlier, according to Kelley Blue Book.
The coming year could determine whether Tesla retains its dominance. The company said last week that it had begun producing the Cybertruck, a futuristic-looking pickup that will go on sale by the end of the year, entering one of the most popular and lucrative parts of the U.S. auto market. The Cybertruck will be Tesla’s first new passenger model since the Model Y in 2020.