Tesla's margin falls as it boosts discounts to drive demand

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Key Points

July 19 (Reuters) - Tesla's (TSLA.O) gross profit margin dropped to a four-year low in the second quarter after Chief Executive Elon Musk doubled down on a price war with rival automakers, but sales and profit still beat Street expectations...

Under pressure from increasing competition and an uncertain economy, Tesla has cut prices and increased discounts and other incentives to reduce inventory, pressuring its automotive gross margin, a closely watched indicator of the company's financial health...

That number, though, was narrower than first-quarter figures.. Recently, a lack of new models has made it tougher for Tesla to take on rivals in China, where glitzier offerings from local players have weighed on demand...

Lower pricing, along with government tax breaks for EV buyers in the United States and elsewhere, drove Tesla's deliveries to a record 466,000 vehicles in the April-July period globally, but ate in to the profitability of the company whose margins have long been the envy of the auto industry...

Tesla's share price has more than doubled this year, helped by rival automakers backing Tesla's charging standard, as well as expanded federal credits for Model 3s and investor excitement over artificial intelligence...

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