Tesla margin shrinks on price cuts as it reveals Cybertruck delivery date

The news: Tesla's third-quarter gross margin shrank from a year earlier as the electric automaker slashed prices to boost demand.

The numbers: The company reported a gross margin of 17.9% for the September quarter, slightly below analyst estimates and down from 25.1% a year earlier. Margins fell despite a roughly USD2,000 per vehicle reduction in raw material costs. Revenue rose 9% to USD23.35 billion ($36.85 billion), the slowest pace of growth in more than three years.

The context: Tesla on Wednesday stuck to its annual production target of 1.8 million vehicles. The company has since January resorted to steep price cuts and discounts to propel sales of its ageing models at a time when overall electric vehicle demand is under pressure. Investors and analysts expect more price cuts as the automaker aims to deliver a record 476,000 vehicles in the fourth quarter to meet its annual target.

The company blamed the margin hit on underutilisation of new factories and an increase in spending on its upcoming Cybertruck model, artificial intelligence and other projects. Tesla also revealed that it has begun pilot production of the Cybertruck, with the first deliveries scheduled for 30 November.