Tesla reported a rise in profit for the second quarter after the company led by Elon Musk cut prices in response to increased competition and higher borrowing costs for car buyers.

The company said on Wednesday that it earned $2.7 billion from April through June, compared with $2.5 billion in the first quarter of this year and $2.3 billion in the second quarter of 2022. Sales rose 7 percent, to $25 billion, from last quarter.

Lower average sales prices, as well as the cost to produce a new pickup truck, weighed on profit, Tesla said. “We are excited that we were able to achieve such results given the macroeconomic environment we are currently in,” the company said in a statement.

The financial results were largely in line with Wall Street expectations, and Tesla shares were little changed in extended trading.

An intensifying price war is making electric cars more affordable but putting pressure on profits across the industry. Wait times for delivery of vehicles have evaporated, and dealers that sold cars with hefty markups a year ago are now offering discounts of thousands of dollars.

Tesla is one of the few companies that makes money on electric vehicles, and it dominates the U.S. and European electric car markets. As a result, the company is in a stronger position than other automakers who are losing billions of dollars on electric cars.

But Tesla has had to sharply cut prices to lure buyers and defend its market share, leading to a lower profit margin on car sales. The company made 59 percent of the electric cars sold in the United States in the second quarter, down from 65 percent a year earlier, according to Kelley Blue Book.

The coming year could determine whether Tesla retains its dominance. The company said last week that it had begun producing the Cybertruck, a futuristic looking pickup that will go on sale by the end of the year, entering one of the most popular and lucrative parts of the U.S. auto market. The Cybertruck will be Tesla’s first new passenger model since the Model Y went on sale in 2020.

Unlike the Model Y, a sport utility vehicle that had scant competition when it went on sale, the Cybertruck enters a crowded field. Ford Motor offers an electric pickup, the F-150 Lightning, as does Rivian, a fledgling carmaker that sells an electric pickup called the R1T. General Motors will soon begin selling an electric version of its Chevrolet Silverado pickup.

In an indication of the intensifying competition, Ford said on Monday that it would cut the price of the Lightning by up to $10,000.

Ford said the price cuts were possible because it had ramped up assembly lines to produce more trucks, and because the price of battery raw materials had fallen. But analysts said the cuts reflected a glut of electric vehicles. Ford could also be trying to seize market share before the Cybertruck and the electric Silverado became available in significant numbers.

Rivian is also becoming a more formidable competitor after reportedly overcoming production problems. Its R1T pickup has outsold the electric F-150 in the first six months of the year.

R.J. Scaringe, Rivian’s chief executive, acknowledged in an interview last month that establishing a smooth production operation had “absolutely been challenging.” But, he added, “We’ve sort of crossed that point of peak pain and are now in this sort of much more predictable stage of ramp.”

In Europe, Tesla is closing in on established carmakers like Fiat as it increases production at a factory near Berlin and plans a major expansion of that plant. But Tesla also faces increased competition in Europe from Chinese automakers like BYD and SAIC, which sells electric cars using the MG brand. In China, Tesla has had to slash prices to withstand competition from domestic automakers that have fresher models.

And all carmakers are coping with rising interest rates, which increases monthly loan payments for car buyers. Some banks are no longer willing to lend to borrowers with weaker credit histories.

Tesla also sells solar panels, batteries for home and grid power storage. The company’s fans often cite those businesses as underappreciated sources of future growth.