Tesla has already cut prices several times this year and more reductions could be on the way judging by comments made by the company’s CEO. Elon Musk told analysts that he was happy to make less money on each car sold if it meant that Tesla was increasing its overall output.
“We’ve taken a view that pushing for higher volumes and a larger fleet is the right choice here versus a lower volume and higher margin,” Musk said on Wednesday during a routine quarterly earnings call, though he did have some good news for investors worried that such a policy wasn’t ideal for making money.
“We expect our vehicles over time will be able to generate significant profit through autonomy,” he added, obliquely referencing the company’s Full Self Driving system, which is now available on a subscription basis as well as via selecting the option and paying $15,000 at the point of sale.
Related: Tesla Slashes Prices For The 6th Time This Year, Model 3 Drops Under $40,000
Tesla’s operating margin hit a two-year low in the first quarter of 2023, shrinking to 11.4 percent for the period that saw the automaker make significant price cuts to its vehicles. But the firm’s Chief Financial Officer, Zachary Kirkhorn, said that a reduction in margin would only become a problem if it impacted Tesla’s ability to invest in future product, and it seems that scenario is some way off.
The automaker’s meteoric growth has slowed recently in the face of rising borrowing costs and stronger competition from rival companies, who were slow to jump on the EV trend but are now making up for lost time. But Tesla has a couple of aces up its sleeve including the much-delayed Cybertruck, which is scheduled to finally launch this fall, and and all-new small EV platform that is currently in development.
Musk has previously suggested that the new architecture could enable Tesla to produce EVs for half the money it spends making current models, and that could be a major problem for rivals, some of whom have been forced to cut their own retail prices to remain competitive with Tesla.
