Price war affects Tesla margins, worries investors

At Tesla, fourth quarter results fell short of expectations. Margins are hit and the manufacturer has warned that production growth will slow in 2024. Enough to scare investors.

The stock at Tesla is in free fall

Tesla’s stock has been falling since its latest quarterly results were released. From the beginning of 2024, its reduction is 15%. The American brand reported revenue of $25.17 billion. A lower-than-estimated result, even though it was still up 6% compared to the same period in 2022. But it’s above all that profitability and margin erosion that worries investors.

By pushing prices down, Tesla is logically cutting into its margins. Net profit for the fourth quarter of 2023 is $2.486 billion versus $2.61 billion expected by analysts. Proof that the price war started by Tesla is starting to have an effect. The company reported a gross margin of 17.6% in the fourth quarter, compared to estimates of 18.1%.

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From late 2022, the manufacturer is slashing prices of its models in China and Europe to try to stay competitive. If investors are concerned, it’s not just for this reason. Indeed, it is perfect. Tesla announced that “ The volume growth rate in 2024 will be lower than the growth rate achieved in 2023

“Management ensures that the teams are working on the launch of the new model.

The American company is banking on the arrival of the Model 2

And this requires transforming entire production chains in Texas, Berlin and Shanghai. But there are other worrying elements: Hertz has decided to get rid of thousands of Teslas, increasingly strong competition from BYD in China, production shutdown in Berlin for two weeks. Or this latest request from Elon Musk to get more shares in the group.

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He feels he must take it More control » At Tesla, if the company wants to realize its ambitions in terms of artificial intelligence. The billionaire clarified on the subject that he “is not 25% are not comfortable with the idea of ​​Tesla becoming a leader in AI and robotics without voting control. Enough to be impressive, but not too much to overturn “

Elon Musk and his teams are betting everything on the arrival of the Model 2. On the subject, a spokesperson clarified that “ We are focused on bringing the next-generation platform to market as quickly as possible, with plans to begin production at Gigafactory Texas in early 2025. This platform will revolutionize vehicle manufacturing. “