- Tesla delivers record number of vehicles after price cuts
- Price reductions boost Tesla sales in China
- Tesla faces competition and price cuts to drive sales
In the three months leading up to the end of June, Tesla says it delivered a record number of vehicles after slashing prices to promote sales.
To compete with other manufacturers, the company has reduced prices in markets such as the United States, the United Kingdom, and China.
This weekend, prominent Chinese automakers reported an increase in June sales.
Elon Musk, the CEO of Tesla, stated earlier this year that he believed pursuing higher sales at the expense of profits was the “right choice” for the company.
Sunday, Tesla announced that it delivered 466,140 vehicles in the second quarter, an increase of more than 80 percent compared to the same period last year.
During the same period, the company reported an increase in vehicle production to nearly 480,000 units.
Bill Russo, proprietor, and chief executive officer of the advisory firm Automobility, told BBC that Tesla has made a strategic decision to become a volume manufacturer.
“This was the primary reason for the increase in sales, as its primarily higher-volume Model 3 and Model Y benefited from the price war,” he continued.
The investment firm Wedbush Securities’ Dan Ives told that Tesla’s price cuts in China were a brilliant poker play that resulted in massive success.
China is the second greatest market for Tesla, behind North America.
The company has reduced prices in the second largest economy in the world, where it confronts competition from local electric car manufacturers.
Li-Auto, based in Beijing, announced over the weekend that its June deliveries reached an all-time high of 32,575, signifying its third consecutive monthly sales record.
During the same month, deliveries by Shanghai-based Nio and Guangzhou-based Xpeng increased to 10,707 and 8,620 units, respectively.
Tesla has also had to contend with increased competition in other parts of the world and the repercussions of higher consumer borrowing costs.
This year, it has responded by reducing prices.
Tesla stated in April that it had no intentions to stabilize the prices of its vehicles, even though repeated price cuts had diminished profits.
Mr. Musk wrote on his social media platform, Twitter, “We’re not starting a price war,’ we’re simply lowering prices to enable affordability at scale.”
At the time, Tesla reported that its first-quarter revenue had increased by nearly a quarter compared to the same period the previous year, due to an increase in car sales.
However, the company’s profit for the same period decreased by 24% due to price reductions and higher raw material and other commodity costs.
The company is scheduled to release its second-quarter financial results on July 19.
