Tesla Inc (NASDAQ:TSLA) has signalled its intent to continue sacrificing margin for market share as it told investors it will not stabilise its electric vehicle prices, despite multiple price cuts impacting profits.
The company, led by Elon Musk, is dealing with the challenges of increased competition and higher borrowing costs for customers, which has led to several price reductions this year.
Tesla's first-quarter revenue increased by 24% year-on-year to US$23.3 billion as car sales rose, while profit dropped by 24% to US$2.5 billion, affected by price cuts and higher costs for raw materials and other commodities.
Musk believes that pursuing higher sales with lower profits is the right choice for Tesla, as it distinguishes the company among other electric carmakers in terms of profitability.
The firm delivered nearly 423,000 cars in Q1, a 36% increase from the previous year but only a 4% increase from the previous quarter. Tesla believes that price cuts will attract more customers, despite the risk of upsetting those who paid more due to earlier price reductions.