Even With Shrinking Profits, Tesla's Business Is Supercharged Compared to the Competition

Electric vehicle (EV) maker Tesla (NASDAQ: TSLA) kicked off third-quarter earnings last week with a rather mixed report. Elon Musk and his team have been battling intense competition both domestically and abroad from rival EV makers such as Rivian, Polestar, Nio, BYD, and even legacy auto manufacturers like Ford and General Motors. A rising number of entrants in the EV landscape, coupled with a stormy macroeconomic environment driven by inflation and high interest rates, has caused Tesla to resort to some pretty drastic measures. Namely, the company has instituted aggressive price cuts in an effort to sell more vehicles and build market share.

The conundrum Tesla faces is that these price cuts have hurt the company's top-line growth while costs are rising. The result? Tesla is generating less profit on a per-vehicle basis.

While this might appear alarming, there are many variables investors should take into account. Let's dig into just how much Tesla's profits are dwindling and how it stacks up against the competition. Investors might find that Musk is still managing a solid operation, and the recent sell-off is an opportunity to buy the dip in Tesla stock. 

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Source Fool.com