Tesla cuts prices: ‘Profits are at risk’

Due to the price cuts that electric car manufacturer Tesla has implemented in China, profits in that country are at risk. International consulting company Evercore warns about this in a report. Activity in China ‘may now break even or even turn negative’, before tax and interest payments are scrapped.

In China, Tesla has reduced the prices of the Model 3 by around 1,700 euros. Tesla hasn’t just implemented price cuts there. The car brand’s prices have also been cut in the US, Germany and the Netherlands after the company posted disappointing first-quarter results. Tesla is already having a tough time in China. The company’s market share fell from 10.5 percent at the start of 2023 to 6.7 percent by the end of the year, reports Bloomberg. Tesla has also reduced car production at its Shanghai factory.

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Investors are disappointed by the new price cuts. After the opening of the US stock market this afternoon, Tesla shares were down 3 percent. This year alone, CEO Elon Musk’s company has lost more than 42 percent of its stock market value.

Disappointing quarterly figures

New quarterly data from Tesla will be released tomorrow. Operating profit is expected to drop 40 percent, while sales will decline for the first time in four years, analysts expect. This comes after Musk announced the biggest restructuring ever, forcing about 10 percent of the workforce to find other jobs. That will reach 14,000 people.