03 Jul BBC : Elon Musk: Tesla delivers record number of cars after price cuts
Media Source: BBC
03 JULY 2023
By Annabelle Liang, Business reporter
Electric carmaker Tesla says it delivered a record number of vehicles in the three months to the end of June, after cutting prices to boost sales.
It has lowered prices in markets including the US, UK and China to compete with rival manufacturers. This weekend, major Chinese car makers also reported a surge in sales in June.
Earlier this year, Tesla boss Elon Musk said he believed pursuing higher sales, with lower profits, was the “right choice” for the company.
On Sunday, Tesla said it delivered 466,140 vehicles in the second quarter, which was more than 80% higher than a year earlier.
Meanwhile, the company said it had increased vehicle production to nearly 480,000 in the same period.
“Tesla has made a strategic choice to be a volume manufacturer,” Bill Russo, the founder and chief executive of advisory firm Automobility, told the BBC.
“This was the main contributor to the sales increase, as its mainly higher-volume Model 3 and Model Y benefitted from the price war,” he added.
Dan Ives from investment firm Wedbush Securities told the BBC that “the price cuts in China have been a smart poker move that was massively successful for Tesla”.
China is Tesla’s second largest market after North America.
The firm been cutting prices in the world’s second largest economy, where it faces competition from local electric car makers.
Over the weekend, Beijing based Li-Auto said its deliveries had hit an all-time high of 32,575 in June, marking its third consecutive monthly sales record.
Meanwhile, deliveries by Shanghai-based Nio and Guangzhou-based Xpeng jumped to 10,707 and 8,620 respectively during the month.
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Tesla has also been grappling with increased competition in other parts of the world, and the impact of higher borrowing costs for customers.
It has responded by cutting prices this year.
In April, Tesla said it had no plans to stabilise the prices of its vehicles, even though repeated price cuts had dented profits.
“We’re not ‘starting a price war’, we’re just lowering prices to enable affordability at scale,” Mr Musk wrote on his social media platform, Twitter.
At the time Tesla said that its overall revenue had risen by almost a quarter in the first quarter from a year ago, as car sales increased.
However, its profit for the same period dropped by 24%, because of price cuts and higher costs of raw materials and other commodities.
The company is due to report its financial results for the second quarter on 19 July.
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