Q2 Net Profit Doubles Year-on-Year... Did Tesla's Bold Sales Strategy Work?

Earnings Per Share $2.27, Exceeding Wall Street Expectations
Domestic Sales Volume Down 31% in First Half
Price Increase on 15th... Sixth Increase This Year

Tesla announced that it achieved a net profit of $2.26 billion (2.9651 trillion KRW) in the second quarter of this year. Tesla is holding a launch event for the top trims P100D of the Model S and Model X in Brooklyn, New York. (AP=Yonhap News)

[Asia Economy Kim Gun-chan, Intern Reporter] American electric vehicle manufacturer Tesla posted earnings that exceeded Wall Street expectations. This is interpreted as the so-called 'bold sales strategy' of raising electric vehicle prices working, despite a decreased market share in the domestic imported electric vehicle market.

Tesla announced its second-quarter earnings on the 20th (local time). Tesla reported a net profit of $2.26 billion (2.9651 trillion KRW) in the second quarter of this year. This figure is double compared to the same period last year ($1.14 billion). Tesla's second-quarter earnings per share were $2.27, surpassing Wall Street's estimate of $1.81, resulting in higher-than-expected profits. However, Tesla's second-quarter revenue was $16.93 billion (22.2121 trillion KRW), down 9.8% compared to the first quarter ($18.76 billion).

Although Tesla's performance improved compared to last year, its market share in the domestic imported electric vehicle market dropped significantly. According to the imported electric vehicle statistics compiled by the Korea Automobile Importers & Distributors Association (KAIDA) on the 17th and Tesla sales statistics from Kaizyu Data Research Institute, Tesla's domestic sales from January to June this year were 6,746 units, a 31% decrease compared to 9,705 units in the same period last year. Tesla's sales share in the domestic imported electric vehicle market was 84.9% in the first half of last year but sharply fell by 32 percentage points to 52% this year.

On the 15th, Tesla raised the prices of the Model 3 and Model Y. Photo by Tesla Korea

Despite this situation, the reason for the improved earnings with increased net profit in the second quarter this year is analyzed to be the effective strategy of raising electric vehicle prices. Tesla's consistent price hikes, or 'bold sales strategy,' have paid off.

Tesla has continuously raised electric vehicle prices citing rising raw material costs. On the 15th, about a month after the previous price increase, Tesla implemented another price hike. This was the sixth increase this year.

According to Tesla Korea on the 21st, the prices of Model 3 and Model Y were raised. The Model 3 Long Range increased by 1.17 million KRW from 83.52 million KRW to 84.69 million KRW. The Model Y Long Range rose by 1.78 million KRW from 94.86 million KRW to 96.64 million KRW, and the Model Y Performance increased by 2.77 million KRW from 101.96 million KRW to 104.73 million KRW. Compared to early last year, the Model 3 Long Range price rose from 59.99 million KRW to 84.69 million KRW, the Model Y Long Range from 69.99 million KRW to 96.64 million KRW, and the Model Y Performance from 79.99 million KRW to 104.73 million KRW.

Elon Musk, CEO of Tesla, is giving a speech at the opening ceremony of the 'Gigafactory' built in Gr?nheide, Brandenburg, near Berlin, Germany.
[Image source=Yonhap News]

Some critics have raised concerns about Tesla's bold sales strategy of raising prices by about 25 million KRW over two years. Automobile manufacturers typically raise prices when launching new models, facelifts, or model year changes. However, Tesla is increasing prices while maintaining the performance and design of existing models.

Regarding this, Musk recently hinted that prices could be lowered amid the controversy over price hikes. According to the Wall Street Journal (WSJ) on the 21st, Musk said, "We cannot keep raising prices to high levels." He explained, "We have raised prices quite a bit, and honestly, Tesla prices are at an awkward level," adding, "We have also experienced many supply chain and production shocks, and tremendous inflation." He emphasized, "I am hopeful (about price reductions), but this is neither a promise nor anything else," and said, "I hope that someday we can lower prices a little."

This content was produced with the assistance of AI translation services.