Electric vehicle tax credits: Here's what you need to know Tesla also also reduced U.S. prices on many of its models early in the quarter, then did it a second time early in March . The company slashed U.S. prices two more times in April, including overnight Wednesday, in an effort to boost demand. It trimmed them in Europe as well. Neither of Tesla's slower-selling bigger models, the S and X, are eligible for tax credits , and prices remained the same Wednesday for both of them. Record sales The net income drop came even though Tesla's sales last quarter rose 36% to a record 422,875 vehicles worldwide. That's largely because the average sale price per vehicle fell just over $5,000 from the first quarter of 2022 due to the price cuts. Analysts estimated that the average Tesla sold for $46,850 last quarter, down from $52,100 a year earlier. The company produced nearly 18,000 more vehicles than it sold during the quarter, indicating softening demand. In its earnings release, Tesla said it's aiming to leverage its position as a cost leader as other automakers try to handle electric vehicle costs. "Although we implemented price reductions on many vehicle models across regions in the first quarter, our operating margins reduced at a manageable rate," the company said. The company said it expects to reduce costs on its vehicles with improved production efficiency at its new factories and with lower shipping costs. Tesla announces plans to build "gigafactory" in Mexico 02:19 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 U.S. is now at 7%, according to Edmunds. Tesla's sliding profit margin doesn't bode well for second-quarter net income since Tesla already has cut U.S. prices two times in April. Tesla said its Model Y small SUV was the top-selling non pickup truck in the U.S. during the quarter, but it didn't give numbers. The company doesn't normally break out sales figures by region. Shares of Tesla, which fell 2% during the trading day Wednesday, dropped another 4% in extended trading after the earnings were released. More from CBS News