Tesla misses revenue mark as lowered car prices results in few takers

Gross margins, a figure that investors are paying close attention to this quarter, dropped from 29.1% to 19.3% year-over-year after the company rolled out a series of recent price cuts.

Tesla cut prices again on Tuesday evening, hours before the company was scheduled to release its first quarter earnings. The series of reductions has brought down the costs of the Models S, 3 and X considerably since the start of the year. Prices of Model Y vehicles were cut by $3,000 on Tuesday, and there was a 4.7% cut to the Model 3 price, which is now under $40,000 for the first time.

First-quarter revenue also slightly declined quarter-over-quarter, but grew significantly year-over-year from $18.76bn.

The company has also been grappling with various lawsuits and other production and vehicle issues in the last quarter. In February, the company was forced to recall more than 360,000 vehicles over a self-driving software flaw that US regulators say can cause vehicles not to adhere to traffic safety laws and risk crashes. The National Highway Traffic Safety Administration (NHTSA) launched an investigation in March into complaints that Tesla steering wheels come off as they are being driven. The investigation will look into about 120,000 cars. Earlier this month, the company was forced to pay $3.2m to a Black former employee after a federal jury ruled that Tesla failed to prevent severe racial harassment. Finally, a Reuters report found between 2019 and 2022 images and videos captured by Tesla cameras that were at times highly invasive and could be tied to specific locations were shared in group chats among employees, even as the company touts privacy as a priority.