Tesla’s August Sales in China Disappoint Despite Price Cuts
Electric vehicle manufacturer Tesla experienced only a modest increase in sales in China during the month of August, despite implementing a series of price cuts in the country. According to data from the China Passenger Car Association, Tesla’s sales rose by 9.3% compared to the same period last year, reaching a total of 84,159 units. However, this figure fell short of the sales recorded in June, even though the carmaker had announced significant price reductions within a three-day span.
In an effort to further stimulate demand, Tesla introduced a new round of price cuts last week, in addition to offering rebates for buyers in the United States, China, and Europe through its Refer and Earn program. These efforts come after Tesla’s July sales were impacted by the scheduled maintenance of its vital Gigafactory in Shanghai.
Despite these price cuts and sales promotions, Tesla CEO Elon Musk emphasized the company’s focus on capturing market share rather than expanding profit margins. Musk believes that sacrificing margins in favor of increasing production is a strategic move that will ultimately result in a significant valuation increase in the near future.
During the second quarter, Tesla reported earnings of 91 cents per share, a 20% increase compared to the previous year. Additionally, the company achieved record revenue of $24.5 billion, representing a 47% surge. Adjusted automotive margins stood at 18.7%, slightly higher than the first quarter but lower than the 22.4% recorded during the second quarter of the previous year. These fluctuations in margins are a result of the series of price cuts implemented in Tesla’s major global markets.
Despite the news of disappointing sales in China, Tesla shares saw a slight increase of 1.3% and were trading above $248.
In summary, Tesla’s August sales in China fell below expectations despite multiple price cuts. The company continues to prioritize market share over profit margins as it aims to increase production and obtain a higher valuation in the future.
