Elon Musk, the CEO of Tesla Inc., said on Wednesday that his company would prioritize sales growth over profit in a slowing economy, continuing the pricing war he launched at the end of last year.
The company, which aggressively cut prices in places like the US and China to boost demand and fend off mounting competition, reported its lowest quarterly gross margin in two years, failed market projections, and withheld another crucial margin statistic from investors another crucial margin statistic.
In after-hours trading, the automaker's shares in Austin, Texas, fell 6%.
"It's better to shift a large number of cars at lower margin and harvest that margin in the future as we perfect autonomy," Musk told analysts on a conference call. He said although the economy remained uncertain, the EV maker's orders exceeded production.
While standing by the company's official objective of 1.8 million deliveries on Wednesday, Musk, who had previously stated that he would have liked to see 2 million vehicles delivered this year, declined to confirm that.
Musk blamed the sluggish economy for Tesla's failure to disclose its automotive gross margin, a number that investors constantly monitor.
Musk had previously stated that the business might forego its market-leading margins in order to maintain volume growth throughout a downturn and keep up with escalating rivalry in China, where it is up against fierce rival BYD Co Ltd.
According to the China Passenger Car Association, the growth in car sales in China remained unchanged in March.
"Tesla's worrying China sales figures indicate demand for its vehicles is slowing more than expected in the face of rising competition from local EV companies," said Jesse Cohen, senior analyst at Investing.com.
In a statement, Tesla expressed the opinion that it will continue to have the largest operating margin among major automakers.
According to 14 analysts surveyed by Refinitiv, the company reported a total gross margin of 19.3%, falling short of market estimates of 22.4%.
Zachary Kirkhorn, Tesla's finance head, pledged in January that the company will maintain a 20% automotive gross margin and an average selling price (ASP) of $47,000 for all models.