Dear clients,
Tesla’s strategy of boosting sales by lowering prices probably led to its strongest revenue growth in five quarters, while profitability fell to a three-year low in the April-June quarter.
Since late last year, the Elon Musk-led electric car maker has launched a price war to stimulate demand and stifle competition from older automakers such as Ford Motor and Chinese rivals including BYD.
Tesla is expected to report on Wednesday that gross margins fell to 18.9% in the second quarter, according to 19 analysts surveyed by Visible Alpha. That’s down from 20.2% in the previous quarter and 25.9% a year earlier.
With electric car sales slowing, Tesla has been aggressively trying to capture a bigger share of the U.S. charger market in an effort to diversify its revenue streams. It has entered into agreements with companies such as Ford Motor and General Motors to use its North American Charging Standard (NACS), allowing its market value to more than double to $880 billion this year. Following these partnerships, several charging companies have announced their intention to adopt Tesla’s standard.
While this will not contribute much to second-quarter revenue, which is expected to grow 45.2% to $24.59 billion, analysts predict it will significantly boost the company’s earnings going forward.
