Elon Musk has hinted that Tesla may implement additional price reductions on its electric vehicles if current economic conditions persist, even if it means impacting the company’s profit margins. Tesla caused a major shift in the EV market last year with significant price cuts across its models in the U.S., China, and Europe. Although price adjustments have stabilized recently, Musk’s comments reflect a willingness to lower prices further to maintain volume growth amidst what he describes as “turbulent times.”
During Tesla’s Q2 2023 earnings call, Musk expressed concerns about the unstable global economy and its impact on business decisions. He acknowledged the company’s readiness to sacrifice profit margins in favor of higher vehicle sales if necessary. Despite these strategies, Tesla’s quarterly automotive gross margin decreased to 18.1 percent, down from 19 percent in the previous quarter and a significant drop from 26 percent a year ago. The company aims to balance cost reduction and innovation while maintaining its delivery targets for the year, despite a slight expected decrease in production due to planned factory upgrades.