At the same time, Tesla is expected to report auto gross margin of 23 percent Wednesday, according to a Visible Alpha survey of market analysts. A year earlier, Tesla reported a 33 percent gross margin, Reuters said.

In January, Tesla CFO Zachary Kirkhorn estimated that gross margin would not fall below 20 percent, which is still very healthy by industry standards. Tesla’s stock price this year is up by more than 70 percent as of Tuesday’s close.

Wedbush analyst Daniel Ives said in a Twitter post Sunday that the main focus of investors going into first-quarter earnings is “the margin structure of the business model.” He added: “Auto gross margins north of 20 percent is the key.”

Tesla already beat global sales expectations with first-quarter deliveries, Ives said, proving that the price cuts were a smart move by the automaker to defend EV share.

Morgan Stanley said in a research note Monday that it expects “a decent” first-quarter report from Tesla but warned that maintaining a minimum 20 percent gross margin could be challenging if price cuts continue.

“Our working assumption is that Tesla will continue its price cut campaign,” said Morgan Stanley analyst Adam Jonas. He said the firm has heard from investors who forecast a range of gross margins from 17 percent to above 24 percent in the first quarter, including items such as software sales and lower lithium prices that could boost profitability.

Tesla has to keep up with growing competition and its own growing manufacturing footprint, meaning that it has to increase sales as new factories ramp up in Texas and Germany to prevent inventory buildup. Tesla also has expanded a plant in China, where the compnay’s numerous price cuts have upended the market as well.