Tesla says it produced an all-time high number of vehicles in the three months ending in June after lowering prices to boost sales. It has reduced prices in markets such as the United States, the United Kingdom, and China to compete with rival manufacturers.
Major Chinese automakers released reports this past weekend indicating a significant rise in June sales. Elon Musk, CEO of Tesla, stated earlier this year that pursuing higher sales with lower profits was the “right choice” for the company.
Tesla’s production increased by 80% last year
Tesla announced on Sunday that it produced 466,140 vehicles in the second quarter, an increase of more than 80% from the previous year. The company said it grew vehicle production to nearly 480,000 during the same period.
According to BBC, Tesla has made a strategic choice to be a volume manufacturer,
This was the main contributor to the sales increase, as its mainly higher-volume Model 3 and Model Y benefitted from the price war
Bill Russo, Founder and CEO of advisory firm Automobility stated on Tesla’s production
The price cuts in China have been a smart poker move that was massively successful for Tesla
Dan Ives of investment firm Wedbush Securities stated on Tesla’s price cut
Li-Auto, Nio, and Xpeng increased their productions
After North America, China is Tesla’s second-largest market. The company has been lowering its prices in the world’s second-largest economy, competing with local electric car manufacturers.
Li-Auto announced over the weekend that its June deliveries reached an all-time high of 32,575 units, marking the company’s third successive monthly sales record.
Furthermore, Nio, and Xpeng increased their monthly deliveries to 10,707 and 8,620, respectively.
The impact of higher borrowing costs for customers and increased competition in other parts of the world have been issues for Tesla. This year, it has responded by lowering its prices.
Tesla cut prices to improve affordability
Tesla stated in April that it had no intentions to stabilize vehicle prices, despite constant price cuts having reduced profits.
We’re not ‘starting a price war,’ we’re just lowering prices to enable affordability at scale
Elon Musk wrote on Twitter
Tesla stated at the time that its total earnings had increased by nearly a quarter year on year in the first quarter due to increased car sales.
Due to price reductions, rising raw material and other commodity costs, and decreased profit for the same period, its profit fell by 24%. On July 19, the company will release its financial results for the second quarter.
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