Tesla doubles discounts on key models in US, shares tank

SAN FRANCISCO: Tesla Inc shares tanked on Thursday (Dec 22) after the luxury electric-lcar maker started offering US$7,500 (RM33,210) discounts on Model 3 and Model Y vehicles delivered in the United States this month, fuelling concerns the company is facing softening demand as economies slow.

On Dec 1, Tesla started offering a US$3,750 “credit” on Model 3 and Model Y vehicles delivered before the end of the year. It raised the credit to US$7,500 on Wednesday. It also recently started offering free supercharging for 16,093km (10,000 miles) for vehicles delivered in December.

The rare discounts follow a series of price increases over the past couple of years by Tesla, which blamed supply chain disruption and inflation.

Shares of Tesla skidded as much as 11.1%, heading for their worst month ever as worries grow over softening demand for electric cars and chief executive Elon Musk’s distraction with Twitter, which he purchased in October.

Tesla underperformed the broader market, which fell as data showing a resilient economy fueled worries over the Federal Reserve’s path on hiking interest rates.

Analysts have reduced their estimates for Tesla’s vehicle deliveries for the current quarter, reflecting slowing growth in key markets like the United States and China.

“The fact they seem to be cutting price to increase deliveries volumes doesn’t raise confidence, particularly at a time where we see increasing competition,” Craig Irwin, a senior analyst at Roth Capital Partners, said.

As the US government plans to introduce tax credits to spur EV demand starting in January, Tesla customers had held off purchases until the incentives take effect, weighing on demand.

The latest discount came just days after the US Treasury Department delayed restrictions on EV incentives until March, meaning Tesla and other US-made electric vehicles will be likely to qualify for the full US$7,500 in incentives starting in January.

Tesla is also offering a US$5,000 credit in Canada on Model 3 and Model Y vehicles delivered before the end of the year. The automaker has also given a discount of 6,000 yuan (RM3,807) on some models in China to the end of 2022.

Tesla said in October it would miss its vehicle delivery target this year, but downplayed concerns about demand after its revenue missed Wall Street estimates. – Reuters

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