Sign In  |  Register  |  About Mill Valley  |  Contact Us

Mill Valley, CA
September 01, 2020 1:29pm
7-Day Forecast | Traffic
  • Search Hotels in Mill Valley

  • CHECK-IN:
  • CHECK-OUT:
  • ROOMS:

Musk mulling more price cuts for Tesla models

Tesla CEO Elon Musk is considering lowering the cost of Tesla vehicles as the company puts an emphasis on sales over profits, in hopes the self-driving software will boost margins.

Elon Musk is considering lowering the cost of Tesla vehicles as the company puts an emphasis on sales over profits, in hopes the self-driving software will eventually boost margins.

More Tesla cars on the road would help the EV manufacturer hold the bulk of market share in the U.S., while providing usage data needed to train the artificial intelligence models behind its self-driving technology.

ELON MUSK TALKS UP TESLA'S CYBERTRUCK ON EARNINGS CALL

"The short-term variances in gross margin and profitability really are minor relative to the long-term picture. Autonomy will make all of these numbers look silly," said Musk, Tesla's CEO.

The company has slashed prices several times in the U.S., China and other markets since late last year and increased discounts and other incentives to reduce inventory, as it tries to shield against competition and economic uncertainty.

As an example, Tesla this year cut U.S. prices of its Model Y long-range version by a quarter to $50,490.

"One day it seems like the world economy is falling apart, next day it's fine. I don't know what the hell is going on," Musk told analysts on a conference call. "We're in, I would call it, turbulent times."

Musk believes full self-driving could one day account for most of Tesla's value and give it a cushion rivals lack as they try to turn their EV operations profitable.

However, Musk’s focus could hurt current profit margins as the company faces a string of probes from U.S. safety regulators involving a multitude of crashes involving Tesla models.

US SAFETY REGULATOR LAUNCHES PROBE INTO FATAL TESLA CRASH

"That margin outlook may be a disappointment for some, present company included, that were looking for margins to slowly improve this year," Gene Munster, managing partner at Deepwater Asset Management – a Tesla investor, told Reuters.

Throughout the second quarter and excluding regulatory credits, the company's automotive gross margin slipped to 18.1% from 19% in the first quarter, according to Reuters' calculation. It also marked a sharp decline from the 26% reported a year ago.

CARVANA SHARES SURGE ON DEAL TO CUT DEBT BY $1.2B

Analysts said the margin weakness would likely weigh on the stock, which has more than doubled this year due to the growing adoption of the company's charging system.

Tesla shares are up 137% year to date.

US NEW VEHICLE SALES CONTINUE ON UPWARD TREND DURING SECOND QUARTER

"Bulls can claim that gross margins were better than feared, record quarterly revenues, discussions with major auto manufacturers to license their full self-driving technology, and euphoria related to their much-anticipated Cybertruck release," Ed Egilinsky, managing director at Direxion, told FOX Business. "Bears can reference operating margins are in a downtrend, gross margins are potentially stagnating, delivery results were buoyed by reduction in prices, the current stock price is trading at very high valuation levels, and they didn’t raise their guidance for year-end total deliveries."

GET FOX BUSINESS ON THE GO BY CLICKING HERE

Reuters contributed to this report.

Data & News supplied by www.cloudquote.io
Stock quotes supplied by Barchart
Quotes delayed at least 20 minutes.
By accessing this page, you agree to the following
Privacy Policy and Terms and Conditions.
 
 
Copyright © 2010-2020 MillValley.com & California Media Partners, LLC. All rights reserved.