Tesla's Margins Fall as Discounts Drive Demand

Tesla missed analysts' profit margin expectations in Q4 due to discounts to boost demand. Shares dropped 4% post-trading. Analysts worry affordable financing could further shrink margins amid high interest rates. Tesla anticipates delivery growth despite intense global competition and hasn't detailed plans for a cheaper model.

Tesla, the renowned electric vehicle manufacturer, fell short of analysts' expectations for its gross profit margin in the fourth quarter. On Wednesday, the company reported lower-than-expected figures due to the introduction of financing offers and discounts aimed at reviving demand for its aging vehicle lineup.

Following the announcement, Tesla shares, based in Austin, Texas, dipped by 4% in after-hours trading. Analysts express concerns that Tesla's strategy of employing affordable financing options may gradually reduce automotive profit margins in upcoming quarters, especially as the company faces the challenges posed by high interest rates.

Tesla's annual deliveries decreased last year for the first time, attributed to rising borrowing costs and heightened competition from companies like China's BYD and European automakers BMW and Volkswagen, which have introduced more affordable models to increase their market share.

(With inputs from agencies.)