shares edged lower in pre-market trading ahead of the carmaker's third quarter earnings, slated for after the closing bell, which are likely to provide a crucial test to CEO Elon Musk's focus on growth over profits.
The slowing sales will test Tesla's 2023 strategy, outlined earlier this year by Musk, of focusing on market-share growth at the expense of profit. "The price war in China is a high stakes poker game for Tesla as so far the 'volumes over margins' thesis has worked well to gain market share, although this trend cannot continue at this pace into 2024 with sacrificing margins for volumes," Ives added.
The cuts have taken their toll on Tesla's profit margins, which were pegged at 18.7% for the three months ended in June, narrowed from last year's tally of 22.4%. Tesla now has data based on around 300 million miles of driving, a figure Musk said will"soon be billions of miles and tens of billions of miles", providing a huge competitive advantage for the company as it ramps-up investments in Ai and other technologies to harness its potential.