California: Tesla Inc. is offering US consumers $7,500 to take delivery of its two highest-volume models before year-end, adding to indications the carmaker is struggling with demand.
The discount on new Model 3 sedans and Model Y sport utility vehicles is double what the company was offering earlier this month. It mirrors an anticipated change in how much of a tax credit certain consumers will be eligible for early next year.
It’s highly unusual for Tesla to offer such perks, as Elon Musk has for years enforced a no-discounts policy. The company also departed from its CEO’s insistence against spending on traditional advertising last month by promoting its wares on a local television shopping channel in China. Tesla also has cut prices and production in that market this quarter.
Tesla shares fell as much as 3.8 per cent after the open of regular trading Thursday. The stock has plunged 39 per cent since Musk closed his deal for Twitter Inc. in late October and 61 per cent for the year. Ten analysts have cut their price targets since last week, according to data compiled by Bloomberg.
Tesla vehicles were expected to be in line for $3,750 tax credits starting in January as part of changes that the Inflation Reduction Act made to federal incentives for electric vehicles. That changed this week when the US Treasury Department announced it was delaying guidance on new battery content requirements. Postponing those restrictions likely will make certain EV models eligible for a full $7,500 credit early next year.
Still, Tesla’s discounts aren’t entirely consistent with the new US tax credits. The company doesn’t appear to be limiting its incentive to consumers under certain incomes, or to vehicles under certain price points, as the Inflation Reduction Act does. The carmaker is also throwing in 10,000 miles of free use of its Superchargers.
While Musk tweeted earlier this month that Tesla is executing better than ever, the company has already said it expects to come up just short of its target to increase deliveries by 50 per cent this year. The carmaker’s production exceeded deliveries by more than 22,000 vehicles during the three months that ended in September, and it’s braced investors for there to be another mismatch this quarter.
Musk has repeatedly criticized the Federal Reserve for raising interest rates and pointed to difficulties in China’s real estate and Europe’s energy markets. His sometimes conspiratorial and often politically charged tweeting also has turned off some consumers.