Photo: Tesla
We’ve become accustomed to Tesla price hikes throughout the past couple of years, especially amid inflation and tight inventories. Nevertheless, things are looking up for potential Tesla customers, as the EV maker quietly introduced a sizeable discount for U.S. customers.
Tesla always pushed the accelerator pedal toward the end of the quarter, proving that sales reports and financial results matter. We’re approaching the year’s end, and Tesla is again on a hunt for customers to sweeten its end-of-year investor reports. Tesla insists that it doesn’t have a demand problem. And yet, this quarter, we saw that the EV maker is willing to adjust prices to make its cars more appealing to customers.
In October, the American EV maker operated its first price cut in years in China in an attempt to improve demand. Tesla targeted the price adjustment at people hunting for government subsidies, and the discounted prices ensured that the Model Y SR fitted the bill perfectly. But it refused to make a similar move in the United States, where its cars exhausted the tax credit quota long ago.
Nevertheless, with the IRA entering into effect in 2023, Tesla EVs will again be eligible for a $7,500 tax credit. The perspective is compelling enough that many people in the market for a new Tesla postponed their purchase until January to benefit from the IRA’s generosity. This has the potential to hurt Tesla sales in the fourth quarter. Indeed, delivery estimates for Tesla vehicles in the United States have dropped significantly, indicating that Tesla might have unsold cars in its inventory.
A surprising move to offer a discount on vehicles in Tesla’s inventory further supports this theory. According to Tesla’s website, the EV maker provides a $3,750 discount on all new cars purchased from the existing inventory. The condition is to take delivery of the vehicle by the end of the year, confirming that Tesla is concerned with the fourth-quarter results. Coincidentally, the discount is half the IRA tax credit. We’re not sure many people would forgo a $7,500 tax credit next year for a $3,750 discount upfront, but some might be tempted.
Like the one in China, this move shows that Tesla is willing to adjust prices when it considers appropriate. The EV maker’s margins on its electric vehicles are insane compared to the industry’s average. Recently, it was speculated that Tesla makes eight times more than Toyota on every sold vehicle. The Tesla Model Y and the Model 3 are still in high demand, although newcomers in the EV market and Tesla’s increased production capacity might force it to lower prices. This move, together with the launch of a more affordable model, is needed if Tesla wants to fulfill its plans to deliver 20 million EVs annually by 2030.
In October, the American EV maker operated its first price cut in years in China in an attempt to improve demand. Tesla targeted the price adjustment at people hunting for government subsidies, and the discounted prices ensured that the Model Y SR fitted the bill perfectly. But it refused to make a similar move in the United States, where its cars exhausted the tax credit quota long ago.
Nevertheless, with the IRA entering into effect in 2023, Tesla EVs will again be eligible for a $7,500 tax credit. The perspective is compelling enough that many people in the market for a new Tesla postponed their purchase until January to benefit from the IRA’s generosity. This has the potential to hurt Tesla sales in the fourth quarter. Indeed, delivery estimates for Tesla vehicles in the United States have dropped significantly, indicating that Tesla might have unsold cars in its inventory.
A surprising move to offer a discount on vehicles in Tesla’s inventory further supports this theory. According to Tesla’s website, the EV maker provides a $3,750 discount on all new cars purchased from the existing inventory. The condition is to take delivery of the vehicle by the end of the year, confirming that Tesla is concerned with the fourth-quarter results. Coincidentally, the discount is half the IRA tax credit. We’re not sure many people would forgo a $7,500 tax credit next year for a $3,750 discount upfront, but some might be tempted.
Like the one in China, this move shows that Tesla is willing to adjust prices when it considers appropriate. The EV maker’s margins on its electric vehicles are insane compared to the industry’s average. Recently, it was speculated that Tesla makes eight times more than Toyota on every sold vehicle. The Tesla Model Y and the Model 3 are still in high demand, although newcomers in the EV market and Tesla’s increased production capacity might force it to lower prices. This move, together with the launch of a more affordable model, is needed if Tesla wants to fulfill its plans to deliver 20 million EVs annually by 2030.
NEWS: Tesla is offering a $3,750 discount in the US for people who buy new Model 3 & Model Ys from Tesla’s inventory if people take delivery by the end of this year. pic.twitter.com/aCiEwjZqhX
— Sawyer Merritt (@SawyerMerritt) December 1, 2022
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