NEW YORK: Tesla reported a jump in second-quarter profits Wednesday as a series of price cuts translated into sharply higher car sales.
Elon Musk’s electric vehicle company reported profits of US$2.7 billion, up 20% on the year-ago level.
While profit margins fell from the prior quarter following price cuts, the results still topped analyst estimates.
Revenues surged 47% to US$24.9 billion – a record for the company.
“We are excited that we were able to achieve such results given the macroeconomic environment we are currently in,” said Tesla, which pointed to cost-cutting efforts and new plant capacity in Texas and Germany as helping to propel the results.
Musk has undertaken multiple price cuts throughout 2023 on vehicles, telling investors in April that the company has “taken the view that pushing for higher volumes and a larger fleet is the right choice here versus a lower volume and higher margin.”
The move comes as more EVs from legacy carmakers like General Motors and Ford are hitting dealerships.
On Monday, Ford announced price cuts of as much as US$10,000 on the F-150 Lightning, an electric version of the best-selling pickup, a move that added to concerns about an oversupply of EVs amid consumer anxiety over lack of charging capacity.
The Ford announcement added to concerns about a potential glut of EVs. EVs currently have more than 100 days of inventory, while industry-wide levels are 53 days, according to a Cox Automotive report.
Shares of Tesla have more than doubled in 2023 so far as investors have overlooked concerns about shrinking profit margins and cheered other recent Musk initiatives.
On Saturday, Tesla unveiled from its Texas factory its first Cybertruck, a futuristic silver vehicle that has been eagerly awaited.
In recent weeks, Musk has also announced collaborations with other auto giants including General Motors and Ford to open up use of Tesla’s respected EV charging network.
In March, Musk announced a major new factory in Mexico. He has also met recently with both French president Emmanuel Macron and Indian prime minister Narendra Modi about potential investments.
Investors are keen to hear more about the production ramp-up for the Cybertruck, said CFRA Research analyst Garrett Nelson.
“We think a lot of positive news is priced in,” Nelson told AFP ahead of the earnings.
In its press release, Tesla said the Cybertruck “remains on track for initial deliveries this year.”
The auto company also confirmed its production target of 1.8 million vehicles for all of 2023.
Shares of Tesla rose 0.24% to US$292.28 in after-hours trading.