Tesla Reduces Prices by $7,500 in an Effort to Increase Shipments

Tesla must be really experiencing demand issues right now as it has announced offering $7,500 to the US customers who purchase its most popular electric vehicle (EV) models before the year ends.

More Discounts From Tesla Before 2022 Ends

New Model 3 cars and Model Y SUVs are now being offered at a discount twice as large as what was advertised earlier this month.

This reflects the fact that the amount of a tax credit to which certain customers are entitled is expected to shift at the beginning of the next calendar year, Bloomberg reported.

CEO Elon Musk has strictly prohibited discounts at Tesla for years, so this incentive is quite rare.

In addition, despite the CEO's repeated objections to spending money on conventional advertising, the automaker began airing commercials for its products on a Chinese shopping channel last month. Tesla has also decreased both pricing and output in that said market this quarter.

The price of Tesla stock dropped by as much as 3.8% shortly after the opening of regular trading on Thursday, Dec. 22. Since Musk finalized his acquisition of Twitter in late October, the stock price has declined by 39% and by 61% in the last 12 months.

The Bloomberg data shows that ten analysts have lowered their price estimates in the last week.

Tesla and the EV Tax Credits

Inflation Reduction Act reforms to government incentives for electric cars were projected to provide Tesla owners $3,750 in tax credits beginning in the new year.

However, as of this week, the US Treasury Department indicated it would be postponing its plans to issue additional battery content criteria.

n the first several months of next year, if those limitations are postponed, a number of EV models will become fully qualified for a $7,500 credit.

Nonetheless, the new US tax incentives are not quite in line with Tesla's reductions.

Unlike the Inflation Reduction Act, which only applies to customers with earnings below a specific threshold, the corporation does not seem to be restricting its offer to automobiles priced below a fixed limit. Furthermore, it includes 10,000 miles of complimentary usage of its Superchargers.

The CEO's Viewpoint

The EV company has already said it expects to fall slightly short of its objective to raise deliveries by 50% this year, despite Musk's statement earlier this month saying Tesla is performing better than ever.

The automaker warned its shareholders to expect another production over-delivery gap this quarter after output surpassed deliveries by more than 22,000 cars in the three months ending in September.

Musk has been vocal about his dissatisfaction with the Federal Reserve's decision to raise interest rates, as well as the problems plaguing the Chinese real estate and European energy sectors.

Some customers have been put off by his tweets, which may seem conspiratorial or politically tinged.