July 23, 2024

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Elon Musk: Tesla may lower prices amid global uncertainty.

Tesla’s CEO, Elon Musk, stated that the electric carmaker could further reduce prices amid the current “turbulent times” in the global economy. This comes as the company faces tough competition and reports squeezed profit margins. In recent months, Tesla has already made several price cuts in major markets like the US and China, leading to concerns among investors and a more than 4% decline in the company’s shares in after-hours trade.

During a call with Wall Street analysts, Musk indicated that he is open to the idea of lowering prices even more if necessary. He described the world economy as unpredictable, with one day seeming like it’s falling apart and the next day appearing fine.

The company’s gross profit margin for the three months ending in June fell to 18.2%, the lowest in four years, compared to 26.2% for the same period last year. This decline in profit margin has raised concerns among investors about the possibility of more price cuts in the future without a clear long-term strategy to improve margins if Tesla emerges as the price war winner.

Earlier, Musk had defended the pursuit of higher sales with lower profits as the right choice for Tesla. The company has been lowering prices in various markets, including the US, UK, and China, to stay competitive with other manufacturers.

On a positive note, Tesla achieved record vehicle deliveries in the second quarter of the year. Additionally, more carmakers, including Japanese giant Nissan, have decided to adopt Tesla’s electric vehicle charging technology, with plans to equip their EVs in the US and Canada with Tesla-developed charging ports by 2025.

Nissan’s commitment to expanding electric mobility by utilising Tesla’s charging technology follows similar moves by US car manufacturers Ford and General Motors, further contributing to the growth and accessibility of electric vehicles in the market.