The electric car manufacturer is generating high sales through price reductions – but the company’s profitability is still suffering.
Tesla posted a record quarter of nearly $25 billion in sales after price cuts — but profits are lagging behind. Sales jumped 47 percent year-on-year to $24.9 billion (22.2 billion euros), as the electric car maker announced after the US stock market closed on Wednesday. Earnings growth was much more subdued, up 20 percent to $2.7 billion.
Operating margin — the ratio of sales to operating income — declined for the third straight quarter, to 9.6 percent. Also noticeable was a significant increase in research and development costs to $943 million from $771 million in the previous three months. Tesla built the first “cybertruck” pickup in Texas a few days ago.
Tesla delivered a record number of 466,000 vehicles in the second quarter. This was also a consequence of price reductions. Company boss Elon Musk had emphasized that he would also accept a decline in profitability for growth. He sees Tesla armed to reduce production costs through greater efficiency. One question in the industry is whether other manufacturers will have to price cut their electric models to attract customers.
Tesla shares rose by around 0.4 percent in after-hours trading after the figures were presented. The price has more than doubled since the beginning of the year.
Source: Stern
