Tesla’s net profit fell 24 percent year-on-year to $2.5 billion (over CZK 53 billion) in the first quarter despite higher sales. The carmaker said in a statement after the close of stock trading on Wednesday. The blame, according to news agencies, lies with the steep discounting of cars, which is leaving its mark on the U.S. electric carmaker’s business balance sheet.
Shares fell 4 percent
Revenue rose 24 percent to $23.3 billion in the first three months of the year, and analysts had estimated it would be slightly higher. Tesla shares fell nearly four percent after the results were announced. But since the start of the year, their price has risen 50 percent.
Tesla delivered 422,875 EVs in the first quarter. The company matched its previous record but fell short of expectations. Its boss Elon Musk has boosted sales this year with several rounds of price cuts. Profitability has suffered – Tesla’s operating profit margin fell from 16.0 percent to 11.4 percent quarter-over-quarter. A year ago, it was still 19.2 percent. Yet Tesla is still ahead in this area. Ford’s and General Motors’ margins recently stood at five and seven per cent, by comparison, DPA reports.
Will electric cars become more affordable?
Musk’s rationale for the lower prices is that he wants electric cars to be massively affordable. There is no shortage of demand. But Tesla produced 18,000 more vehicles than it sold last quarter. “Tesla is going through a difficult phase. Inventories are rising,” said analyst Gene Munster of investment firm Deepwater Asset Management. Analysts see Musk’s aggressive pricing policy as a response to growing competition in the electric car business, which is going from a fringe affair to a mass market.
Musk said on Wednesday, according to Reuters, that Tesla is likely to bring fully self-driving technology to market this year. That should generate significant profits to offset margin pressure, he said.
Source: Czech Press Office
