Tesla (TSLA) stock slipped on Monday as the automaker once again cut prices in China, signaling demand erosion for its EVs on the mainland.
, according to data published by China’s Passenger Car Association . July’s delivery total was Tesla’s lowest of the year in China.
Tesla’s margins, which will shrink due to price cuts, are a concern for investors, as the company’s stock took a hitin late July. Despite a strong earnings and revenue beat for the quarter, shares slumped after gross margins came in at 18.2%, missing analyst expectations for 18.8%. Tesla's operating margin also fell below 10% to 9.6%, which is nearly 5% below what it was a year ago.
Wall Street seems to believe the discounting of Tesla vehicles in China and elsewhere will continue and margins will continue to suffer. “We believe Tesla will need to further reduce pricing and/or increase promotional activity this year and/or next year, incrementally pressuring margins,” Bernstein analyst Toni Sacconaghi
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