Tesla’s net income slumped in the third quarter versus a year earlier, as price reductions helped drive strong sales growth but also ate into the carmaker’s profit margins

The Texas-based maker of electric vehicles, solar panels and batteries reported net income of 1.85 billion dollars for the July-September quarter, a 44% decline from a year earlier.

Earnings per share fell to 53 cents from 95 cents.

Excluding stock-based compensation, Tesla’s adjusted net income fell to 2.32 billion dollars, or 66 cents per share.

On that basis, Tesla’s earnings fell short of analysts’ consensus estimate of 73 cents per share, according to FactSet.

Total revenue rose 9% to 23.35 billion dollars. Analysts had forecast 24.19 billion dollars.

Earlier this month, the company reported that it sold 435,059 vehicles during the July-September period, an increase of 27% from the same stretch last year.

Even so, Tesla’s deliveries came in below the 461,000 vehicles analysts had predicted the company would sell during the quarter, according to FactSet Research.

The third-quarter sales also marked a step back from Tesla’s 466,140 vehicle deliveries during the April-to-June period, something Tesla blamed on planned downtime to upgrade its factories.

Tesla has been slashing prices most of this year to keep attracting buyers who now have a wider selection of electric vehicles. The discounts range from 4,400 dollars on Tesla’s top-selling vehicles to as much as 20,000 dollars on its most expensive models.

The latest round of cost-cutting trimmed Tesla’s operating margin, which represents how efficiently sales are turned into pre-tax profits, down to 7.6% in the third quarter. That is down from 17.2% a year earlier.

The measure also declined sharply in the first two quarters of this year.

As usual, Tesla’s third-quarter sales consisted primarily of its Model 3 and Model Y vehicles, which have been made even more attractive by lowered prices.

Tesla’s shares closed 4.8% lower on Thursday. They were up 2% in after-hours trading following the release of the earnings report.