Tesla cars to get cheaper amidst 'turbulent times', says Musk

Tesla CEO Elon Musk signalled on Wednesday that he would cut prices again on electric vehicles in "turbulent times", even as his all-out price war on automaker rivals squeezes the company's own margins.

The company has slashed prices several times in the US, China and other markets since late last year, and increased discounts and other incentives to reduce inventory, as it tries to shield against competition and economic uncertainty.

"One day it seems like the world economy is falling apart, next day it's fine. I don't know what the hell is going on," Musk told analysts on a conference call. "We're in, I would call it, turbulent times."

Tesla shares, which had been largely flat after hours, fell nearly 5 per cent after Musk's comments.

The large price cuts have pressured Tesla's automotive gross margin, a closely watched indicator in the industry, but Musk has said Tesla would sacrifice margin to drive volume growth.

He said so again on Wednesday: "I think it makes it does make sense to sacrifice margins in favour of making more vehicles," adding that if macroeconomic conditions were not stable, Tesla would have to lower prices.

As an example, Tesla this year cut US prices of its Model Y long-range version by a quarter to $50,490.

Tesla's quarterly automotive gross margin, excluding regulatory credits, fell to 18.1 per cent in the second quarter from 19 per cent in the first quarter, according to Reuters' calculations. That was in line with Street estimates, but a far cry from the 26% it reported a year earlier.

Tesla reported overall gross margin of 18.2 per cent for the April-June period, the lowest in 16 quarters.

Earlier, Tesla said in a statement it was focusing on reducing costs and on new product development, and that the "challenges of these uncertain times are not over."

ALSO READ:

• Dubai: Residents applaud emirate's plans to expand public car charging stations by 170%