--- title: Tesla charges ahead with lower prices, sacrificing profits and shocking rivals - The Hustle description: Elon Musk’s profit-margin tinkering is making waves across the auto industry. image: https://hs-sbup.thehustle.co/hubfs/The%20Hustle%20News/Assets/Images/276389377-httpsthe-hustle.hubspot.comhubfsDaily20Newsletter20ImagesMay202202023tesla_profit_margin_drop.webp --- # Tesla charges ahead with lower prices, sacrificing profits and shocking rivals ![Jacob Cohen](https://thehustle.co/wp-content/uploads/2021/01/IMG_5670-1-modified-768x768.png?width=48&height=48&name=IMG_5670-1-modified-768x768.png) [Jacob Cohen](https://hs-sbup.thehustle.co/author/jacob-cohen) [Jacob Cohen Twitter profile ](https://twitter.com/ImJacobCohen) Published: May 02, 2023 Updated: October 11, 2023 For investors, Tesla’s price cuts are kinda like parallel parking in New York City — tough to watch, impressive when nailed. ![Tesla gross profit margin](https://hs-sbup.thehustle.co/hs-fs/hubfs/The%20Hustle%20News/Assets/Images/276389377-httpsthe-hustle.hubspot.comhubfsDaily20Newsletter20ImagesMay202202023tesla_profit_margin_drop.webp?width=595&height=400&name=276389377-httpsthe-hustle.hubspot.comhubfsDaily20Newsletter20ImagesMay202202023tesla_profit_margin_drop.webp) Whether the automaker has nailed its latest cuts, which Elon Musk [says](https://twitter.com/elonmusk/status/1647337392268021761) will “enable affordability at scale,” remains to be seen. #### **Driving a hard bargain** Last week, Musk [assured](https://www.bloomberg.com/news/articles/2023-04-25/tesla-model-y-price-cuts-mean-elon-musk-s-either-disruptive-or-desperate?srnd=premium&sref=3Ac2yX40) investors Tesla remains the only automaker capable of selling cars for “zero profit” today, thanks to high-margin driverless software that will allow its cars to appreciate in value (and which was supposed to debut years ago). - Already in 2023, the company’s Model Y has seen its price drop $20k+, or 30%, to ~$47k — $759 below that of the average US vehicle. You’re unlikely to find anyone looking to buy a Model Y who’s going to complain about this — because that would be odd. But head over to Wall Street, and you’ll find a whole bunch of folks questioning its impact on Tesla’s profit margins, which, while still strong at 19% in Q1, was the company’s lowest in 11 quarters. #### **Shifting gears** Some analysts [wonder](https://www.bloomberg.com/news/articles/2023-04-25/tesla-drops-model-y-starting-price-below-the-average-us-vehicle?sref=3Ac2yX40) whether these cuts will challengeTesla’s competition enough that they’ll be forced to slow pricey EV pivots, or worse yet, go out of business. - “We are trying to resist,” Luca de Meo, CEO of French carmaker Renault, recently said in regard to Tesla’s cuts. **Whatever the case: **Remember, there’s always the option to get a [Hongguang Mini](https://www.youtube.com/watch?v=jPlMiyrdq8g&t=27s), General Motors’ $4.5k Trojan horse that outsold Tesla’s Model 3 in China last year. 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