Telsa is willing to sacrifice profit for higher volume in the short term, said CEO Elon Musk, reaffirming the automaker's commitment to price cuts after missing first-quarter expectations for total gross margin.
"We've taken the view that pushing for higher volumes and a larger fleet is the right choice here, versus a lower volume and higher margin," Musk said on Wednesday's quarterly earnings call. "However, we expect our vehicles over time will be able to generate significant profit through autonomy."
Moreover, Musk said, Tesla's margins remain among the healthiest in the industry even after multiple rounds of price cuts this year for its Model 3 sedan, Model Y crossover, Model S sedan and Model X crossover.
"While we reduced prices considerably in early Q1, it's worth noting that our operating margin remains among the best in the industry," Musk said, adding that global production should reach between 1.8 million and 2 million this year. In 2022, Tesla reported global production of about 1.4 million.
Musk also said on the call that he expects Tesla's software and hardware combination to achieve autonomy in the near future on its current fleet of consumer vehicles.Tesla sells driver-assistance software that it calls Full Self Driving for $15,000, even though Tesla vehicles cannot drive themselves and require a human driver to be in control at all times.