{"id":189133,"date":"2023-04-21T11:45:00","date_gmt":"2023-04-21T15:45:00","guid":{"rendered":"https:\/\/ibkrcampus.com\/?p=189133"},"modified":"2023-04-21T11:21:16","modified_gmt":"2023-04-21T15:21:16","slug":"road-domination","status":"publish","type":"post","link":"https:\/\/www.interactivebrokers.com\/campus\/traders-insight\/securities\/stocks\/road-domination\/","title":{"rendered":"Road Domination"},"content":{"rendered":"\n<h2 class=\"wp-block-heading\" id=\"h-what-s-going-on\">What&#8217;s going on?<\/h2>\n\n\n\n<p>Tesla\u2019s price-cutting tactic has&nbsp;<a href=\"https:\/\/www.cnbc.com\/video\/2023\/04\/20\/elon-musks-tesla-price-cuts-strategy-is-one-way-to-stay-in-customers-minds-analyst-says.html\">slashed<\/a>&nbsp;the EV maker\u2019s margins, but Musk seems willing to pay the price for ultimate supremacy.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\" id=\"h-what-does-this-mean\">What does this mean?<\/h2>\n\n\n\n<p>Tesla\u2019s slimmed-down prices might\u2019ve hoisted sales up by 24% last quarter \u2013 but as expected, those discounts ate into profit margins big time. A host of profitability measures dropped to their lowest in years, well below the record highs of last year. In fact, the firm\u2019s profit margins suffered even more than some analysts\u2019 already reduced forecasts had predicted. But Musk\u2019s so sure that lower profit in the short run will be outweighed by heftier market share in the future that he\u2019s set to double down on this strategy. Mind you, with early results showing price cuts have only&nbsp;<em>slightly&nbsp;<\/em>lifted the number of cars Tesla\u2019s sold this year so far, skeptical investors still sent shares down 6%.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\" id=\"h-why-should-i-care\">Why should I care?<\/h2>\n\n\n\n<p><strong><em>The bigger picture:&nbsp;<\/em><\/strong><em>Method to the madness.<\/em><\/p>\n\n\n\n<p>In fairness, Tesla\u2019s industry-leading margins do give the firm a lot to play with: the EV maker\u2019s&nbsp;<a href=\"https:\/\/www.investopedia.com\/terms\/o\/operatingmargin.asp\">operating profit margin<\/a>&nbsp;sat at 11.4% last quarter, casting a Cybertruck-sized shadow over rivals General Motors\u2019 6.6% and Ford\u2019s 4% in 2022. What\u2019s more, governments around the world are pushing for stricter emission restrictions, which means putting more EVs on the road. That could make it the right time for Tesla to assert its dominance, later leveraging that sway to profit from rolling out more autonomous and robotaxi features. Layer on Musk\u2019s reassurance that orders are now outpacing production, and Tesla\u2019s plan could soon see it relax on cruise control.<br><br><strong><em>Zooming out:&nbsp;<\/em><\/strong><em>Back against the wall.<\/em><\/p>\n\n\n\n<p>French carmaker Renault isn\u2019t being drawn in yet, though, saying this week that it has no plans for drastic price cuts on its EVs. But some analysts reckon Europe\u2019s third-biggest EV brand might have to cave to stay in the game \u2013 after all, Tesla\u2019s Model 3 is now cheaper than Renault\u2019s electric Megane in France.<\/p>\n\n\n\n<p>&#8212;<\/p>\n\n\n\n<p>Originally Posted April 20, 2023 &#8211; <a href=\"https:\/\/go.finimize.com\/wp\/news\/road-domination\/\">Road Domination<\/a><\/p>\n","protected":false},"excerpt":{"rendered":"<p>Tesla\u2019s price-cutting tactic has\u00a0slashed\u00a0the EV maker\u2019s margins, but Musk seems willing to pay the price for ultimate supremacy.<\/p>\n","protected":false},"author":186,"featured_media":0,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[6,8,9,22,26,3],"tags":[2060,2015,161],"contributors-categories":[13597],"class_list":{"0":"post-189133","1":"post","2":"type-post","3":"status-publish","4":"format-standard","6":"category-north-america","7":"category-region","8":"category-securities","9":"category-stocks","10":"category-text-articles","11":"category-traders-insight","12":"tag-electric-vehicles","13":"tag-ev","14":"tag-tesla","15":"contributors-categories-finimize"},"pp_statuses_selecting_workflow":false,"pp_workflow_action":"current","pp_status_selection":"publish","acf":[],"yoast_head":"<!-- This site is optimized with the Yoast SEO Premium plugin v26.9 (Yoast SEO v27.4) - https:\/\/yoast.com\/product\/yoast-seo-premium-wordpress\/ -->\n<title>Road Domination | Traders&#039; 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