Tesla’s profit fell in the third quarter, disappointing Wall Street expectations, after the carmaker cut prices to maintain its dominance of the electric vehicle market.
Tesla Chief Executive Elon Musk also dashed hopes that a new model called the Cybertruck would soon revive earnings, warning that it would take at least 18 months for the pickup truck to become profitable after going on sale in late November. Will take.
The company reported a net profit of $1.9 billion from July to September, 44 percent less than the $3.3 billion Tesla earned in the same three-month period a year earlier.
Saying he wants to “tame down on expectations”, Mr Musk warned during a conference call with financial analysts and investors on Wednesday that “it will take some time to reach mass production with the Cybertruck and make the Cybertruck cash flow positive.” There will be huge challenges.”
He added, “The amount of blood, sweat and tears that will be required to achieve this is staggering.”
The company has cut car prices in the United States by about 25 percent over the past year, prioritizing sales over profits. The least expensive version of Tesla’s best-selling car, the Model Y sport-utility vehicle, now starts at $44,000 before government incentives, or about the same as the comparable Toyota RAV4 Prime plug-in hybrid, which features an electric motor and a Has a gasoline engine. ,
“We believe an industry leader needs to be a cost leader,” Tesla said in a statement.
Despite the cuts, Tesla’s share of the electric vehicle market in the United States dropped from 60 percent in the first quarter to 50 percent in the third quarter, according to Kelley Blue Book. BMW, Mercedes, Hyundai, General Motors and other automakers are increasingly introducing new electric vehicles, undermining Tesla’s dominance.
Tesla faces tough competition from local automakers in China and Europe, the two biggest markets for battery-powered cars.
Earlier this month Tesla said sales declined in the third quarter due to temporary factory closures to retool assembly lines at factories in Austin, Texas and Shanghai, after analysts forecast a decline in profits. Had expected. But the recession was bigger than expected.
At least until recently, Tesla was more profitable than established American automakers, allowing it to undercut prices. “I see it as a way to protect market share at the expense of margin,” said Kevin Roberts, director of industry insight and analysis at online auto sales site CarGurus.
The company may not be able to continue cutting prices indefinitely. Its net profit margin in the third quarter was 8 percent, in line with traditional carmakers.
Investors were hoping the Cybertruck would revive pickup sales. The company said on Wednesday that it expects to begin deliveries of the vehicle on November 30, two years behind schedule.
Mr Musk acknowledged that Tesla faces serious challenges in mass-producing the vehicle with the unusual stainless-steel body. The material is corrosion resistant and does not need to be painted, but it is more difficult to shape and weld.
“We dug our own grave with the Cybertruck,” Mr Musk said.
After an initial surge in customer interest, Ford Motor, Rivian and General Motors have reported declining sales of electric pickup trucks, suggesting the market for such vehicles may not be as large as industry executives and analysts had anticipated. Thought once. This week, GM said plans to start producing electric pickups at a factory in Michigan will be delayed by a year, and Ford said it was slowing production of its F-150 Lightning truck.
Mr Musk insisted demand for the Cybertruck was “off the charts” and more than a million people have placed orders. But he said higher interest rates have led to higher monthly loan payments, reducing consumers’ ability to afford a new car.
“We have to make it at a price that people can afford,” he said.
Tesla could benefit if the United Automobile Workers strike against Ford, GM and Stellantis expands to more factories. So far, employees at six plants owned by three companies have walked off the job. Tesla employees do not belong to any union.
Tesla’s share price, which fell about 5 percent in regular trading on Wednesday, fell another 3 percent in extended trading after Mr. Musk’s conference call.
“I’m not saying things will be bad, but I am saying they could get worse,” he said of the economy.