Tesla reports high profit loss

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Revenue increased 24 percent to $23.3 billion. Analysts expected a little more. The stock fell nearly 4 percent in after-hours trading. Prices have increased by almost 50 percent since the start of the year.

Tesla delivered 422,875 electric cars in the first quarter. Thus, although the company equaled its previous record, it fell short of expectations. Musk has boosted sales with heavy discounts and has already had several rounds of price cuts this year. Profitability suffers as a result – Tesla’s operating margin fell to 11.4 percent from 16.0 percent in the previous quarter. It was still 19.2 percent a year ago.

Tesla is still way ahead in the industry. For comparison: Ford and General Motors’ margins were five and seven percent recently. Musk justifies the low prices by wanting to make e-cars affordable for the masses. There is no shortage of demand.

However, Tesla produced about 18,000 more vehicles last quarter than the company delivered. “Tesla is going through a difficult phase. Stocks are rising,” commented Gene Munster, auto expert at investment firm Deepwater Asset Management. Analysts see Musk’s aggressive pricing policy as a response to increased competition in the electric car business, which has transformed from a niche market to a mass market.

Meanwhile – at least due to regulatory pressure – nearly all established automakers competed with high investments. To stay on the growth trajectory and defend its market leadership, Tesla has no choice but to help with purchase incentives.

However, the company assumes that it will retain one of the highest profit margins in the automotive industry in the future, despite the price cuts, according to its own statements. Tesla is also sticking to its ambitious goal of expanding production at 50 percent annual growth rates and believes it is on track to deliver about 1.8 million cars this year.

(SDA)

Source :Blick