Excluding items, Tesla reported a profit of 85 cents, in line with estimates.

Tesla said profitability was also weighed down by higher raw material, commodity, logistics and warranty costs as well as outlays to ramp up ouput of 4680 battery cells, while it faced margin headwinds from the underutilization of new factories.

Deliveries of higher-priced Model S and Model X vehicles also slumped from the previous quarter, it said.

The electric-vehicle maker lowered sticker prices four times in the United States between January and March, sacrificing industry-leading margins to maintain dominance in the U.S. and catch up with rivals in China — its second-largest market.

But a murky economic outlook meant that Tesla CEO Elon Musk’s plan to ride out a recession with price cuts and lower production costs was not enough to make up for strained consumer spending on big-ticket items. Tesla deliveries in the first quarter rose 4.3 percent from the fourth quarter.

The company reported first-quarter revenue jumped 24 percent to $23.33 billion, just below a consensus estimate of $23.21 billion, according to 14 analysts polled by Refinitiv.

Tesla CFO Zachary Kirkhorn promised in January that Tesla would not go below margins of 20 percent and an average selling price of $47,000 across all models.

Tesla said its operating margin was 11.4 percent in the three-month period, down from 16 percent last quarter and 19.2 percent a year earlier. The carmaker downplayed concern about recent price cuts, saying its operating margins fell “at a manageable rate.”

The company has slashed prices several times in the United States, China and other markets since late last year, as Musk said Tesla could sacrifice its industry-leading margins to drive volume growth during a recession.