Tesla CEO Elon Musk said high interest rates and wars around the world have affected car buyers as well as demand for the company's electric vehicles.
On October 18, electric car company Tesla announced its third quarter financial report. Accordingly, net profit was only $2.3 billion, down 37% compared to the same period last year and also the lowest in 2 years. The company's revenue was $23.4 billion, up 9%, but not meeting forecasts.
Tesla said its revenue and profits were affected when it had to temporarily shut down several production lines for upgrades, causing sales to decline. Tesla has also continuously reduced prices this year to stimulate demand.
During the announcement, Tesla CEO Elon Musk also mentioned the impact of high interest rates on car buyers and demand for Tesla electric vehicles. He said that high interest rates were part of the reason Tesla had to lower prices this year.
"I'm very concerned about the current high interest rate environment. I don't know what to say when I see that for most people, buying a car is a monthly payment. A lot of people don't have savings and have to pay off debt," he said. Interest rates in the US are currently at a 22-year high.
Elon Musk attends a technology conference in Paris (France) in June 2023. Photo: Reuters
He also said high interest rates have delayed Tesla's next planned factory in Mexico. "We want to make an accurate assessment of the global economy before we build a factory in Mexico. When interest rates start to come down, we will accelerate," he said.
Musk said that war is also a challenge for car sales. "When people read about war in the world, they don't think about buying cars," he said.
Still, Tesla said it is on track to deliver 1.8 million vehicles this year, which would mean fourth-quarter sales would have to increase 17% compared to the same period in 2022.
Tesla also expects to begin delivering its Cybertruck electric pickup truck later this year. Musk posted on X yesterday after the earnings report that the first batch of vehicles would be delivered on November 30. However, he remained cautious about the Cybertruck’s ability to make a profit, given its uniqueness from previous Tesla vehicles.
“I think this is our best product yet. But it also requires a lot of effort to get to the volumes and margins we want at a price that’s affordable for everyone. So I want to lower my expectations for Cybertruck. It’s probably going to take about a year to 18 months to get cash flow positive,” he said.
Tesla shares fell 5% yesterday after Musk’s comments about short-term losses on the Cybertruck and delays in building a factory in Mexico. The stock has still more than doubled this year after losing 65% last year.
Ha Thu (according to Reuters, CNN)
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