Elon Musk’s Tesla on Wednesday reported a fall in fourth-quarter gross margin from a 12 months earlier because it cut prices and offered incentives to spice up demand for its electric vehicles.
Tesla warned of a pointy slowdown in volume growth this 12 months compared with the previous 12 months.
“In 2024, our vehicle volume growth rate could also be notably lower than the expansion rate achieved in 2023, as our teams work on the launch of the next-generation vehicle at Gigafactory Texas,” it said in a press release.
Shares of the Austin, Texas-based company fell 5% in prolonged trading.
The corporate reported a gross margin of 17.6% for the three months ended December, compared with 23.8% a 12 months earlier, and analysts’ average estimate of 18.3% in response to LSEG data.
Within the third quarter, Tesla posted gross margin of 17.9%.
Record deliveries within the quarter also pushed margins lower, as price cuts and costs related to the production ramp-up of the brand new Cybertruck offset lower costs of raw materials for batteries.
Tesla slashed prices throughout last 12 months. It reduced the value of the Model Y, its hottest vehicle, by as much as 26.5% previously 12 months within the US.
The corporate managed to hit its 2023 deliveries goal of 1.8 million cars, at the same time as CEO Elon Musk warned of a success to demand from high rates of interest.
Nonetheless, Tesla lost its spot as the highest EV maker by sales to China’s BYD within the fourth quarter.
Tesla’s fourth-quarter revenue rose 3% to $25.17 billion, which marked its slowest pace of growth in greater than three years.
Analysts on average expected $25.62 billion, in response to LSEG data.
