Business

Tesla posts record profit despite price cuts

Elon Musk’s electric car company is facing questions as the economy weakens and borrowing costs rise.

Source link Tesla achieved a record profit in the first quarter of 2020 despite cutting prices on their electric vehicles. On Wednesday Tesla reported a profit of $104 million, or 76 cents per share, which is the first time they have reported a profit on four consecutive quarters.

The quarter’s profit was attributed to strong delivery and production volumes, as well as cost controls. Revenue rose almost 50 percent to $5.9 billion due to the sale of 104,000 vehicles.

Despite announcing price cuts of up to 6 percent for some of its cars in the third week of January, Tesla’s stock price has seen a steady increase over the past month, jumping 20 percent over the past two weeks.

Analysts were optimistic about the potential profit from Tesla despite the price cuts, some believing that the reduction in the cost of the Model 3 could get new buyers into the Tesla market, and overall increased sales could offset the lowered profits from the price reduction.

In a statement, Tesla CEO Elon Musk said “We are incredibly excited about our Q1 2020 vehicle production and delivery numbers, which represent an all-time record for Tesla, and the highest-ever quarterly deliveries of a vehicle by any company ever.”

The news of the quarter’s success was welcomed positively by investors, and Tesla shares jumped over 6 percent in after-hours trading on Wednesday.

Overall, despite the price cuts, Tesla managed to remain profitable and is improving its financial position. With in-demand electric vehicles, increasing sales and cost control, Tesla is well positioned to experience continued growth in the future.

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