Tesla's profit margins drop on aggressive discounts, shares fall

Tesla missed market estimates for first-quarter total gross margin on Wednesday, throttled by a series of aggressive price cuts meant to spur demand in a sagging economy and fend off rising competition.

Elon Musk-led Tesla reported a total gross profit margin of 19.3 percent, compared with expectations of 22.4 percent, according to 14 analysts polled by Refinitiv. This was the lowest since the fourth quarter of 2020.

A higher gross margin means a company retains more capital, which it can then use to pay for other costs or service its debt.

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