Price cuts and high competition from China has Tesla profits free falling
On Tuesday this week, Tesla reported its lowest profit margin in more than five years and missed Wall Street earnings targets in the second quarter, as the electric vehicle maker cut prices to revive demand while it increased spending on AI projects.
The company said it was on track to produce new vehicles, including more affordable models, in the first half of 2025, although the models will result in achieving less cost reduction than previously expected. Shares fell 8 percent in after-hours trade.
Meanwhile, on Wednesday Tesla stock value fell heavily, slumping by a high 12.3 percent in its worst single-day fall since September 2020. This came after the very popular electric car manufacturer reported its lowest profit margin in more than five years and missed second-quarter earnings estimates.
We have seen Tesla cutting prices nearly every quarter in the past year as rivals BYD, MG and Chery bring to showrooms better build quality and higher driving range and with lower asking prices.
Interestingly, just last April, Tesla Malaysia cut prices by RM8,000. Right now a the Tesla Model Y price starts from RM191,000 and for the Tesla Model 3 the selling price starts from RM189,000.
This price cut came after similar price cuts were announced in America, China and Germany.
Interestingly, this regular discounting by Tesla having an adverse effect on used Tesla prices and this is why right now some Malaysians are able to enjoy USED Tesla ownership from a low RM99,000 only. Yes, we have already seen how used Tesla prices have dropped drastically in the past year and will continue to do so as new Tesla prices get discounted.
Meanwhile, global EV sales are declining, the biggest movement coming from the mature EV markets in Europe and also North America. However in ASEAN, it’s the reverse as early adopters and ‘tax-free’ incentives push EV adoption to even out the fall in European EV demand.
So, should you buy a new Tesla in Malaysia tomorrow? Well, we suggest you wait until January 2025, which is just 5 months away to see how much more the Malaysian selling price will drop and then decide.
