Part 6/9:
On the flip side, Tesla reported challenges that investors should consider seriously. Notably, automotive revenue declined by 8% year-over-year as price cuts on the Model 3 and Model Y led to a lower average selling price. While this strategy may sacrifice short-term revenue for long-term market share, such moves also have risks that could impact immediate financial performance.
Additionally, the company experienced a significant drop in margins. The gap gross margin fell to 16.3% from 17.6% the previous year, with operating margins dropping to 6.2%. This reduced profitability per vehicle is concerning, particularly as Tesla faces increasing competition from rivals and external pressures like high-interest rates that make financing vehicles more expensive.