Elon Musk ready to deepen EV price war as Tesla bets on self-driving future
Elon Musk is making a calculated bet: sacrifice margins now for better ones later when full self-driving software is completely integrated into Tesla cars. It's a plan that could intensify the electric-vehicle price war. Shares of the automaker fell 4% before the bell on Thursday after Musk signaled no end in sight for price cuts that have already sent gross margins to a four-year low.
Getting more cars on the road would help Tesla maintain its dominant US market share in «turbulent times» and give it access to precious usage data needed to train the artificial intelligence models behind its self-driving technology. «The short-term variances in gross margin and profitability really are minor relative to the long-term picture. Autonomy will make all of these numbers look silly,» Musk said.
The billionaire believes full self-driving (FSD) could one day account for most of Tesla's value and give it a cushion rivals lack as they try to turn their EV operations profitable. But that focus risks sacrificing current profitability for technology that has for years missed Musk's targets to achieve full self-driving capability and is in the crosshairs of regulators after a number of crashes involving Tesla vehicles. «That margin outlook may be a disappointment for some, present company included, that were looking for margins to slowly improve this year,» said Gene Munster, managing partner at Deepwater Asset Management — a Tesla investor.
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