Tesla sinks as Price Cuts Signal a Ceiling for Costlier Models

Tesla Inc. (NASDAQ: TSLA) share value fell drastically after disappointing Model 3 deliveries as well as an across-the-lineup price cut. The developments prompted concerns that the carmaker may bump up against a demand ceiling, as per Bloomberg.  

As of Wednesday morning, Tesla’s shares had fallen as much as 9.7% to USD 300.52. This sharp drop in prices was primarily due to the Company announcing that it would offer a USD 2,000 price cut on each of its vehicles to help make up for U.S. buyers now being eligible for only a USD 3,750 federal tax credit for the next six months.

According to Bloomberg, Tesla’s Chief Executive Officer Elon Musk is starting this year with worries about how much of the market is left for pricier models of the Model 3. The Company stated that the majority of Model 3 orders in the past 3 months were from new customers. This suggests that many consumers are still waiting to buy versions of the sedan at the USD 35,000 sticker price.

Starting in February 2019, Musk plans to fill additional Model 3 orders in Europe and China. This would evidently offset some of the potential drops in U.S demand linked to the shrinking tax credit.

Tesla has been urging buyers to make use of the federal tax credit, with Chief Executive Officer Elon Musk saying in a tweet that “the benefit would drop to half beginning in 2019.”

3 Comments
  1. Katie Peralta 3 weeks ago
    Reply

    This is the time in the $tsla share price lifecycle we see the Musk Pump & promises of various fantasies that won’t ever come to fruition. Since it won’t be twitter, my guess is we see an internal email leak by tomorrow afternoon. But this time is different, & it won’t work.

  2. Dana Pico 3 weeks ago
    Reply

    Tesla’s were overpriced anyway, and the government subsidies simply transferred taxpayer dollars to $TSLA. They couldn’t have cut the price $2000 unless it already had a margin of more than that. Your tax dollars made @ElonMusk richer.

    • Brett Corbin 3 weeks ago
      Reply

      Tesla delivered about 1.5% fewer vehicles in Q4 than expected. Pretty big reaction for such a small miss. $TSLA

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