2023-10-19 07:59:28
Direct – Tesla’s profits fell in the third quarter, refuting Wall Street’s expectations, following the company reduced prices to maintain its dominance in the electric car market.
Moreover, Tesla CEO Elon Musk dashed hopes that the new Cybertruck would quickly revive revenues, warning that it may take 18 months for it to become profitable following it is put on the market at the end of November.
The company announced a net profit of $1.9 billion during the period from July to September, which represents a 44% decrease from the profits announced by the company during the same period the previous year, which amounted to $3.3 billion.
Musk said, during a conference held with financial analysts and investors, that he wanted to reduce expectations, as he warned that there would be enormous challenges to reach the volume of “Cyber Truck” production.
The New York Times reported that the company reduced car prices by regarding 25% in the United States over the past year, giving priority to sales over profits.
Despite the price cuts, Tesla’s share of electric cars in the United States declined to 50% in the third quarter from 60% in the first quarter, according to Kelley Blue Book, as BMW, Mercedes, and Hyundai introduced General Motors and others are new electric cars at a rapid pace, eroding Tesla’s dominance.
Tesla also faces fierce competition in China and Europe, the two largest markets for electric cars, from local automakers.
Analysts had expected Tesla’s profits to decline following it announced at the beginning of this month a decline in sales in the third quarter due to the temporary closure of the factory to re-equip assembly lines at factories in Austin, Texas, and Shanghai, but the decline exceeded expectations.
It is worth noting that Tesla shares fell by 5% during Wednesday’s trading, continuing to decline another 3% following Musk’s statements.
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