Elon Musk, the CEO of Tesla, has suggested that the electric carmaker might continue reducing prices amid what he describes as a turbulent global economy.
Musk's remarks followed the company's announcement of squeezed profit margins, attributed to intense competition in the market. Tesla has recently implemented price cuts in key markets like the US and China.
After-hours trading in New York saw Tesla's shares drop by over 4% following the announcement.
The company reported its lowest profit margin in four years, with gross profit margin declining to 18.2% for the three-month period ending June, down from 26.2% during the same period last year.
During discussions with Wall Street analysts, Musk indicated a willingness to further reduce prices if necessary.
"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," remarked Elon Musk.
"We're in, I would call it, turbulent times," he added.
Investors are expressing concerns about the potential for further price cuts at Tesla, according to Arun Sundararajan, a Professor at the NYU Stern Business School.
"This feels like a price war with no long-term strategy to raise margins if Tesla wins the war," he added.
Earlier this year, Musk stated that pursuing higher sales with lower profits was the "right choice" for Tesla.
The company has reduced prices in markets such as the US, UK, and China to compete with rival manufacturers. Earlier this month, Tesla reported a record number of vehicle deliveries in the three months ending June.
This surge in deliveries coincides with more carmakers agreeing to adopt Tesla's electric vehicle (EV) charging technology.
On Wednesday, Japanese motor industry giant Nissan announced that its EVs in the US and Canada would feature Tesla-developed charging ports starting in 2025.
Nissan Americas' chairperson, Jérémie Papin, emphasized the company's commitment "to making electric mobility even more accessible."
This announcement follows similar moves by US car manufacturers Ford and General Motors.
source: bbc