Dec 22 (Reuters) – Tesla Inc (TSLA.O) Shares fell on Thursday after the luxury electric carmaker began offering $7,500 discounts on Model 3 and Model Y vehicles. America This month, the company faces softening demand as economies slow.
On December 1st, Tesla began offering a $3,750 “credit” for Model 3 and Model Y vehicles. It raised the credit to $7,500 on Wednesday. It recently started offering free supercharging for 10,000 miles (16,093 km) on vehicles delivered in December.
The rare discounts follow a series of price hikes by Tesla over the past two years, which it blamed on supply chain disruptions and inflation.
Shares of Tesla fell as much as 11.1%, heading for their worst month on record on growing concerns over softening demand for electric cars and Chief Executive Elon Musk’s distraction from his October acquisition of Twitter.
Tesla underperformed the broader market, which fell as data showing a resilient economy fueled concerns about the Federal Reserve raising interest rates.
Analysts have cut estimates for Tesla’s vehicle deliveries in the current quarter, reflecting slower growth in key markets such as the US and China.
“It looks like they’re cutting prices to increase delivery volume, which doesn’t raise confidence, especially at a time when we’re seeing increasing competition,” said Craig Irwin, senior analyst at ROTH Capital Partners.
With the US government planning to introduce tax incentives to boost EV demand starting in January, Tesla customers have weighed in on demand and held off on purchases until the incentives take effect.
The latest waiver comes days after the U.S. Treasury Department delayed restrictions on EV incentives until March, meaning Tesla and other U.S.-made electric vehicles would be eligible for the full $7,500 incentive starting in January.
Tesla is offering a $5,000 credit on Model 3 and Model Y vehicles in Canada until the end of the year. The automaker has offered a 6,000 yuan ($860) discount on certain models in China until the end of 2022.
Tesla said in October it would miss its vehicle delivery target this year, but downplayed concerns about demand as its earnings missed Wall Street estimates.
($1 = 6.9761 yuan)
Reporting by Hyunjoo Jin in San Francisco, Jayveer Singh Shekhawat, Maria Ponnejad and Nivedita Balu in Bangalore; Editing by Tom Hoke, Emilia Sithole-Madaris, Shaunak Dasgupta and Leslie Adler
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