Tesla is offering rare year-end discounts on two of its best-selling models
Detroit – Tesla Inc. Rare discounts until the end of the year on its two best-selling models, in a sign that demand for its electric cars is slowing.
The Austin, Texas, company started offering a $3,750 incentive on its Model 3 sedan and Model Y SUV on its website earlier this month, but on Wednesday it doubled the discount to $7,500 for those who receive deliveries between now and December 31.
The move comes ahead of a new federal tax credit of $7,500 that is set to go into effect on January 1. Teslas were not eligible for a previous federal tax credit program because the company reached the 200,000 vehicle sales limit. Next year’s credits have no such limit.
“This is a sign of gaps in demand and not a good sign for Tesla heading into the end of the year,” Wedbush analyst Dan Ives said in an email. “Competition for electric vehicles is increasing across the board, and Tesla is seeing some demand headwinds.”
Lower-priced versions of the Model 3 and Y will be eligible for the federal tax credit in January due to restrictions on auto purchase prices described in the Inflation Control Act.
Without the discounts, the Model 3 starts at just over $48,000 including shipping, while the Y is priced at just over $67,000. To be eligible for the federal tax credit, vehicles cannot have a sticker price of more than $55,000 for sedans and $80,000 for trucks and SUVs.
On a regulatory whim, many vehicles like Teslas that are built in North America would likely be eligible for the full $7,500 tax credit from January to March because the Treasury Department is still working on rules that require battery metals and parts to come in from North America. . Most vehicles will likely only be eligible for half the credit once the rules come out in March.
Tesla may offer discounts on juice sales before the end of the year in an effort to make good on a pledge to increase car sales by 50%.
On the company’s third-quarter earnings conference call in October, Tesla CFO Zachary Kirkhorn said Tesla would fall just short of its 50% sales growth goal. But later CEO Elon Musk contradicted him.
Musk predicted production and delivery growth of 50% annually, but also cited logistical problems with shipping the vehicles.
To hit the 50% sales growth goal, Tesla must have a stellar performance in the fourth quarter.
During September, the company delivered 908,573 vehicles, compared to just over 936,000 vehicles a year earlier. To increase sales by 50% over last year, which would amount to about 1.4 million vehicles, the company will have to sell more than 490,000 vehicles in the fourth quarter.
Industry analysts in a survey by data firm FactSet forecast that Tesla would sell 431,000 vehicles in the fourth quarter, ending the year at 1,341 million.
Tesla shares have lost more than 60% of their value since Musk announced in April that he had acquired a large stake in Twitter. They fell nearly 9% on Thursday, closing at $125.35 after US safety regulators said they would investigate two more Tesla accidents potentially involving automated driving systems.
Eventually, Musk bought the social network, and investors became concerned about demand and that the CEO had turned his attention away from the auto company.
Musk said this week that he plans to stay on as CEO of Twitter until he can find someone willing to replace him for the job.
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