Tesla earnings nearly halved as price cuts put pressure on profits

Earnings at Tesla almost halved as discounts and price cuts pile pressure on the electric carmaker’s profit margins.

The company, led by Elon Musk, has sought to drum up interest in its plans for robotaxis, artificial intelligence and “genuinely useful” humanoid robots as deliveries slipped amid cooling demand.

Sales at the business rose 2% to $25.5bn in the latest quarter, ahead of expectations of $24.8bn on Wall Street. But profits dropped 45% to $1.48bn.

Shares in Tesla dropped 4.5% during out-of-hours trading in New York.

Musk, the world’s richest man, has in recent weeks endorsed Donald Trump for president and reportedly plans to donate tens of millions of dollars to back his campaign.

“I’m not suggesting that Trump is without flaws,” he wrote on Sunday, “however we need an administration that is more likely to be meritocratic and promote individual freedoms over the heavy hand of government.”

Musk, who also leads SpaceX, the rockets and satellites business, and controls X, the social network formerly known as Twitter, declared earlier this month that both companies would follow Tesla by relocating their headquarters from California to Texas. He cited California’s new law banning school transgender notification requirements as one of the reasons for the move.

Shareholders in Tesla, which is based in Austin, approved a $45bn pay deal for Musk in June, following a fiercely contested referendum on his leadership.

Dan Ives, analyst at Wedbush, said ahead of Tesla’s latest results that the company had “clear momentum” and was on track “over the coming quarters” to build up production to an annual rate of 2 million vehicles, citing stabilization of worldwide demand.