Tesla’s gross profit margin slipped to its lowest level in 13 quarters during the first three months of this year as it turned to a series of price cuts to buttress sagging demand, according to figures released late on Wednesday.
The US electric-car maker’s shift in focus to maintaining market share as the car market weakens led to a 21 per cent drop in adjusted earnings per share, even as revenue jumped 24 per cent from a year before.
Tesla has recently led most other carmakers on gross profit margin, leaving it room to reduce prices and still maintain solid profitability. During the past quarter, however, it fell to 19.3 per cent, about 10 percentage points below the peak it hit in the same period a year before and the lowest since the final quarter of 2019.
Breaking with recent practice, Tesla did not disclose the gross profit margin from its automotive business, which had been one of the most closely followed measures of its profitability.
Despite the sliding profits, Tesla still met reduced Wall Street earnings expectations, with adjusted earnings per share of 85 cents on revenue of $23.3bn. Based on formal accounting principles, earnings fell to 73 cents from 95 cents a year before.
Its shares slipped 5 per cent in after-market trading, adding to a 10 per cent fall that had hit the stock since the beginning of the month, when the company reported new vehicle deliveries for the first quarter that were below some analysts’ forecasts.
Despite price cuts of up to 20 per cent on some versions of the Model 3 and Model Y, the number of vehicles Tesla delivered in the quarter was up only 4 per cent from the final quarter of 2022.
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