Tesla’s third-quarter gross margin shrank from a year earlier as the electric automaker slashed prices to boost demand in the face of higher interest rates.

Elon Musk’s company has since January resorted to steep price cuts and discounts, including reductions of more than 6% across models in the third quarter, to propel sales at a time when overall demand is under pressure.

While those efforts drove up sales in the first half of the year, planned factory retooling to prepare for production of new models throttled Tesla’s deliveries between July and September.

Investors and analysts expect more price cuts as the automaker aims to deliver a record 476,000 vehicles in the fourth quarter to meet its annual target of 1.8 million vehicles.

The company reported a gross margin of 17.9% for the quarter ended September, compared with 25.1% a year earlier, when it had not yet begun the price cuts.

In the second quarter, Tesla posted gross margin of 18.2%.

Revenue in the third quarter rose 9% to $23.35 billion, compared with analysts’ estimates of $24.1 billion.

That marked the slowest pace of growth in more than three years.

The company’s shares were down about 2% in extended trading.

They have nearly doubled this year through Wednesday close.