Tesla's Profit Margin Dropped -- Here's Why That's a Good Thing
In recent weeks, investors have been debating whether the vehicle price cuts Tesla (NASDAQ: TSLA) has announced in all its major markets were forced by a drop in demand or a strategic plan. Tesla is the only profitable pure electric-vehicle (EV) maker. It has room to reduce margins and still have a very profitable business.
When the company reported its fourth-quarter results on Wednesday, it gave investors a window into its thinking on the future EV market and its strategic path. While Tesla's gross and operating margins declined, the company reported record net earnings in the quarterly period, showing that its plan is paying off. Investors responded by continuing the positive momentum the stock has shown so far in 2023.
Other big news from the company is a new $3.6 billion investment to expand its existing Nevada Gigafactory. The company's original factory mainly is a battery-manufacturing facility that supplies Tesla's California EV assembly plant with battery packs and sells its battery-storage products.
Source Fool.com
