Tesla reported a drop in third-quarter earnings as the electric vehicle maker fell short of Wall Street expectations.

Tesla reported $2.3 billion in adjusted earnings, or 66 cents a share, down 37% from a year earlier, and its lowest profits in two years. It is still expected to report earnings of 73 cents a share, according to analysts surveyed by Refinitiv.

In the third quarter, the company’s revenue was $23.4 billion, up 9% from a year earlier but short of analyst expectations of $24.1 billion. Faced with increasing electric vehicle competition from established automakers, Tesla has repeatedly cut prices of its vehicles to boost sales.

It reported thinner profit margins once again, even though it is still more profitable than traditional automakers. In comparison to a year earlier, its gross margin fell by 7 percentage points to 17.9%. The adjusted automotive margin, excluding regulatory credits, fell nearly 11 percentage points to about 18%.

The quarter was clearly not rosy for Tesla, as the company missed the street across most metrics, according to Dan Ives, a tech analyst at Wedbush Securities.

According to the company, it has been successful in reducing the cost of each vehicle, even though its new factories in Texas and Germany are more expensive than its existing plants in California and China.

“In the third quarter, we implemented necessary upgrades to enable further unit cost reductions. The company’s statement stated that “cost leadership is essential for an industry leader.”.

Production volumes declined sequentially after several production lines were temporarily shut down for upgrades, affecting both profits and sales, the company said.

Tesla CEO Elon Musk spoke with analysts about the impact of higher interest rates on car buyers and Tesla’s demand for its vehicles. Rates rising this year have contributed to Tesla’s price reductions, he said.