Tesla cuts prices to boost sales of its cars – El Financiero

Tesla cut the prices of its entire line in the United States and major European markets in the automaker’s latest effort to stoke demand after several quarters of disappointing deliveries.

The company reduced the cost of the Model Y by 20 percent and slashed up to $21,000 off the price of its most expensive vehicles in its home market. Tesla also made significant sales in countries such as Germany, the United Kingdom and France a week after his second round of cuts in China since October.

The drastic changes reflect the dilemma Tesla faces after falling well short of its annual vehicle deliveries target, despite year-end discounts and incentives that CEO Elon Musk has spurned in the past. To continue to grow and fully utilize the plants you opened or expanded in the last year, Tesla may be forced to compromise profit margins Wall Street held when the company’s production was restricted.

Changes in the United States reduce the price of sedans model 3 Y certain Model Y sport utility vehicles below the limits they had to meet to qualify for electric vehicle tax credits of up to $7,000.

The Treasury Department and the Internal Revenue Service released guidelines late last year that irritated Musk because the Model Y wasn’t heavy enough to be considered an SUV. That means five-seat versions of the vehicle are subject to the $55,000 price limit that applies to sedans, instead of the $80,000 limit for SUVs.

Tesla now notes on its website that the $7,500 federal tax credits for which certain customers are now eligible will apply to vehicles you turn in through March.

While some parts of the new US law went into effect on January 1, the Treasury Department is still finalizing battery content sourcing requirements that could cut in half the tax credit for which certain electric vehicles are eligible.

Toni Sacconaghi, an analyst at Bernstein who gives the Tesla stock a rating equivalent to “sell,” he wrote last week that the automaker was facing “a significant demand problem” and that their challenges would persist in part because its models were too expensive to qualify for tax credits.

“We believe that Tesla you will need to lower your growth targets (and run its factories below capacity) or maintain and potentially add to recent price cuts globally, putting pressure on margins,” Sacconaghi wrote in a Jan. 2 report. “We see that heDemand woes will persist until Tesla can offer lower prices in volume, which will not be before 2025″.

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