Tesla slashed prices for a sixth time this year to alleviate the loss of Biden's EV tax credits
Tesla slashed prices on some of their Model 3 and Model Y vehicles for the sixth time this year in order to try and increase demand. This decision comes right before their first quarter earnings report, which is expected to show a decrease in profit.
Tesla has slashed the prices of some Model 3 and Model Y cars in the US for the sixth consecutive year, according its website. The world's biggest electric vehicle manufacturer is looking to increase demand. The announcement comes just before its first-quarter earnings report which is expected show a decline in profits.
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The company has reduced the price of the Model Y and Rear-Wheel Drive Model 3 by $2,000 each. These are two of its best-selling models. This change was made after new regulations regarding the sourcing and manufacture of battery components reduced RWD Model 3’s eligibility for the full tax rebate.
Tesla's Model 3 RWD is now the least expensive Tesla car. However, the tax credit for the vehicle has dropped from $7.500 to $3.500, because the minerals used in the batteries are from China. The tax credit changes don't affect other Tesla models.
Tesla is slashing prices to maintain its dominance on an EV market that has become increasingly crowded. The company slashed the prices of its cars by up to 20% in January after it missed delivery targets for 2022.
Tesla is engaged in a fierce price war in China with local manufacturers such as Xpeng, Nio and Xpeng. Tesla's locally produced Teslas are now almost 50% cheaper in China than in the US. In March, the China Association of Automobile Manufacturers called for a temporary halt to discounts.
Tesla will likely report lower earnings despite higher sales. This is a trend which is largely consistent with the EV sector as a group. Automakers such as Volkswagen, Ford and Jeep spend billions to compete with Tesla.
According to Refinitiv's data via Reuters, Tesla is expected announce a 24.2% increase in revenue over the previous year, despite a 2.4% anticipated decrease in profit as a result of price cuts.
As of 11:30am in New York, Tesla shares were down by 1.5% following the price reduction news. The overall stock price is up 67% for the first quarter 2023. This represents a partial recovery of losses suffered by the company after its shares dropped roughly two thirds of their value in 2018.
This month, the US Treasury will be implementing a new tax credit policy for EVs. Two new requirements are in place, worth a total of $3,750 each.
To qualify for the first credit, 50% of the battery component's value must be manufactured or assembled in North America. The second credit requires that 40% of the minerals used in the battery of the vehicle, such as lithium, nickel, cobalt and cobalt, must be sourced within the United States, or from a designated trading partner.
This is a list of all EVs which will be still eligible under the new regulations.
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