• Price cuts at Tesla
• New cars are no longer a scarce commodity
• Tesla announces fully autonomous driving for 2023
Since the beginning of the year, Tesla has reduced prices in the USA a total of six times. Ultimately, the top SUV cost less than the average US car. CEO Elon Musk is pursuing a very specific strategy: higher sales, lower profits. According to a study by the consulting company EY, the world’s largest car manufacturers have had to accept losses in profitability. Tesla, which was previously the margin leader, has even dropped to fourth place.
Dream margins soon over?
According to the analysis, sales rose by around 19 percent in the first quarter. Sales increased by only four percent. Profitability is measured by the EBIT margin. This puts the operating result in relation to sales and has fallen from nine percent to eight. A total of 16 manufacturers were included in the study. The leader is Mercedes-Benz with a margin of 14.7 percent, closely followed by BMW with 14.6 percent. Kia scored 12.1 percent. The result for the electric car manufacturer Tesla was disappointing. With a margin of just 11.4 percent, the company came fourth.
Constantin Gall, head of the Western Europe mobility division at EY, says: “For the first time since the beginning of 2021, we are seeing clear signs of slowing down in profits, which are no longer increasing as rapidly as sales”. He goes on to say that the days of dream margins could soon be over for some companies, because “a new car will soon no longer be the scarce commodity it was last year,” says Gall.
Tesla sale without profit
Elon Musk is still optimistic, as teslamag reports. He said on a recent conference call, “It’s better to deliver a large number of lower-margin cars and lock in that margin in the future as Tesla “perfects autonomy,” announcing that Tesla will do it this year to realize fully autonomous driving.
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