BEIJING, July 25 (TMTPost)— Tesla Inc.’s sales in its home market became cooler while overseas markets including China remained momentum.

Credit：Visual China

Tesla generated $11.33 billion in the Unites States for the quarter ended June 30, increasing 17.9% from a year ago, while revenue from China surged 51.3% year-over-year (YoY) to $5.73 billion, according to a filing with the U.S. Securities and Exchange Commission (SEC) on Tuesday. Sales from overseas markets outside China recorded $7.86 billion that quarter, more than doubling from the same period a year earlier.

The filling showed sales in China and other international markets accelerated in the past quarter while U.S. market suffered a slowdown. Tesla’s revenue in China edged 5.18% YoY to $4.89 billion in the first quarter of the year, revenue in U.S. grew by 28.77% to $11.25 billion, and that from other global markets contributed $7.19 billion, up 33.86% YoY. Revenue in U.S. rose 23% YoY to $22.58 billion from January to June. The same period saw sales in China stood at $10.62 billion with a yearly increase of 25.9%, and sale in other Tesla’s overseas markets climbed by 69% to $15.06 billion.

Sales by geographic area highlighted the main target of Telsa’s aggressive price cuts was those markets beyond the United States. The U.S. electric vehicle (EV) giant launched five rounds of promotion including price cuts and various subsidies in China from the mid September to the end of last year. It intensified price war this year to boost demand. It slashed price by up to 13% in China on January 6, making the starting price of Model Y and Model 3 down to new low and about 43% and 30% cheaper than those on sale in U.S. Less than a week later, Tesla lowered prices across the U.S. Europe, the Middle East and Africa by as much as 20% on January 12, expanding its price war globally. Then Tesla China surprisingly raised prices twice in four days in May after CEO Elon Musk signaled more cuts to come at the earnings call in April.

Tesla earnings in the first quarter of the year were severely dented by major price cuts. The non-GAAP diluted earnings per share (EPS) fell 21% YoY to $0.85, just shy of the estimated $0.86. That is the first yearly drop in non-GAAP EPS since the third quarter in 2019. Its gross profit margin that quarter dipped below 20% to a two-year low 19.3%, missing analysts’ estimated 22.4%.

However, financial results in the second quarter released last week showed Tesla has weathered price slash as both the top and bottom line was better than the Wall Street expectation. Revenue jumped 47% YoY to the quarterly record of $24.93 billion, beating analysts’ expected $24.51 billion. Non- GAAP EPS gained 20% YoY to $0.91, topping analysts’ projection of $0.81. But the margin still reflects how hard the price war hit. The GAAP gross margin declined 3 percentage points YoY to 18.2%, the lowest in four years, compared with Wall Street’s estimate of 18.8%. Automotive gross margin excluding credits slid to 18.1%, the lowest since the second quarter of 2019.

Tesla CEO Musk played down the weakened margin and considered more price cuts at an earnings call. "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," said Musk.  The executive said his company will have to keep cutting the prices of its vehicles if interest rates continue to rise. While Tesla reconfirmed its production target of about 1.8 million vehicles this year, Musk said output could drop the current quarter due to factory upgrades.