© Reuters. FILE PHOTO: The logo of car manufacturer Tesla is seen at a branch office in Bern, Switzerland October 28, 2020. REUTERS/Arnd Wiegmann/File Photo
(Reuters) -Tesla said its gross margin fell in the second quarter from the previous three months, squeezed by the electric-vehicle maker’s efforts to boost sales through price cuts.
The company’s shares fell 2.5% in extended trading.
Under pressure from increasing competition and an uncertain economy, Tesla (NASDAQ:) has cut prices and increased discounts and other incentives to reduce inventory.
Lower pricing, along with government tax breaks for EV buyers in the United States and elsewhere, drove Tesla’s deliveries to a record 466,000 vehicles in the April-July period globally, but ate in to the profitability of the company whose margins have long been the envy of the auto industry.
The company on Wednesday reported gross margin of 18.2% for the April-June period, compared with 19.3% for the first quarter.
On an adjusted basis, Tesla earned 91 cents per share. Analysts had expected a profit of 82 cents per share, according to Refinitiv IBES data. It was not immediately clear if the numbers were comparable.
The company reported revenue in the April-June period of $24.93 billion, compared with estimates of $24.48 billion, according to Refinitiv data.
Tesla CEO Elon Musk in April doubled down on the price war, signaling the company would prioritize sales growth ahead of profit in a weak economy and amid rising competition.
Tesla’s share price has more than doubled this year, helped by rival automakers backing Tesla’s charging standard, as well as expanded federal credits for Model 3s and investor excitement over artificial intelligence.
