Tesla leaves door open for further price cuts

A focus on volume-over-value may allow the dominant new entrant to pass on future savings

Tesla leaves door open for further price cuts
Photo by Vlad Tchompalov / Unsplash

The market has punished Tesla for a first-quarter slump in automotive gross margins to 19pc, below a previously discussed 20pc floor. Shares fell sharply again on Thursday, down to just above the $165/share mark as of US morning trade, having been at almost $185/share at Tuesday’s close.

The firm has already cut prices six times this year, with those discounts playing a part in the drop in margins. But, interestingly, CEO Elon Musk and others in Tesla’s senior management team are not forecasting a swift rebound in margins, even though some of the other factors are characterised as one-offs and the firm expects improvements both in input costs and internal efficiencies.


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