Price reductions across the model line-up cut into Tesla’s first-quarter net income, causing it to fall 24% from a year ago.

The electric car and solar panel company, based in Austin, Texas, said on Wednesday it made 2.51 billion dollars (£2.01 billion) from January through to March, down from 3.32 billion dollars (£2.67 billion) a year ago.

Revenue rose 24% to 23.33 billion dollars (£18.75 billion), but the company’s operating profit margin fell.

Tesla made an adjusted 85 cents per share in the first quarter, matching analyst estimates, according to FactSet.

Analysts had expected profits to fall because of the price cuts.

Early in the quarter Tesla reduced US prices on many of its models, then did it a second time early in March.

The company slashed US prices two more times in April, including overnight Wednesday, in an effort to boost demand.

It trimmed them in Europe as well.

The net income drop came even though Tesla’s sales last quarter rose 36% to a record 422,875 vehicles worldwide.

That is largely because the average sale price per vehicle fell just over 5,000 dollars from the first quarter of 2022 due to the price cuts.

Analysts estimated that the average Tesla sold for 46,850 dollars last quarter, down from 52,100 dollars a year earlier.

The company produced nearly 18,000 more vehicles than it sold during the quarter, indicating softening demand.

Tesla’s operating margin fell from 19.2% in the first quarter of last year to 11.4% this quarter.

Analysts had been watching for whether the price cuts would affect Tesla’s income and profit margins for the quarter amid rising interest rates and pesky inflation.

The average new vehicle loan in the US is now at 7%, according to Edmunds.

Tesla’s sliding profit margin does not bode well for second-quarter net income since Tesla has already cut US prices two times in April.

Overnight Wednesday, Tesla lopped 3,000 dollars off the US starting prices of all versions of the Model Y, its top-selling model.

The cuts dropped the lowest-priced Dual Motor model to 46,990 dollars, the Long Range model went to 49,990 dollars and the Y Performance dropped to 53,990 dollars.

All versions of the Model Y were already eligible for the US tax credit because the price limit for SUVs is 80,000 dollars.

The Model 3 Rear Wheel Drive, Tesla’s lowest-priced vehicle, saw a cut to 39,990 dollars.

It is eligible for the 7,500 dollar tax credit because the price limit for cars is 55,000 dollars.

The Model 3 Performance version stayed the same at 52,990 dollars.

Neither of Tesla’s slower-selling bigger models, the S and X, are eligible for tax credits, and prices remained the same on Wednesday for both of them.