because of the emergence of Model 3 customers like Mike Land. His view of the relative weakness of Elon Musk’s more expensive electric cars also helps explain why the company is still struggling to make money.
The Model 3 brought new buyers into the fold and countered the narrative that Tesla is demand challenged, sparking a stock rally since the beginning of June. But the electric-car maker’s shares are still down 23% for the year in part because the Models S and X are A further compression of margins could spell trouble for Tesla, which is expected to report its second-quarter financial results on Wednesday. The company reported ain the first quarter after repeated assurances it would stay in the black. Last month, Musk said rapid growth in sales may actually make it harder for Tesla to be sustainably profitable.
“They seem to be holding up OK without a redesign, but it’s unusual for a car company, especially a luxury maker, not to do a redesign,” said Michelle Krebs, senior analyst at AutoTrader. “Usually, they’re about every four years and maybe a re-freshening in between.”
This is generally how the auto industry works. The company with the best quality, reliability, and cost structure wins. Economies of scale matter in manufacturing. Tesla isn’t unique in this regard.