Tesla Will Cut Prices to Combat Tax Credit Phase Out

Megalith

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The federal tax credit incentive for eco-friendly, plug-in vehicles is beginning to phase out for Tesla, as the automaker has sold well over 200,000 vehicles. While buyers were entitled to a tax credit of $7,500 for going electric, Tesla buyers will only get half that credit ($3,750) for the next six months, which will fall even further in July ($1,875) before fully evaporating in 2020. As this could deter prospective buyers, Tesla is cutting its car prices in the United States by $2,000.

The price cut might be good news for Tesla buyers, but it was bad news for investors. The price cut could lead to a decline of about $180 million in revenue every quarter, based on Tesla's fourth-quarter sales. Tesla's (TSLA) stock fell 8% on the news. The tax credit phase-out comes just as Tesla was preparing to sell a $35,000 version of its Model 3 sedan, the first time it will be taking aim at the price-conscious mass market.
 

Dodge245

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3750+2000=7500? Something doesn't add up here... You know what buy a Hyundai ioniq, at least that won't fall apart on you.
 

Zarathustra[H]

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3750+2000=7500? Something doesn't add up here... You know what buy a Hyundai ioniq, at least that won't fall apart on you.
I never heard anyone claim they were going to completely match the tax cut in price cuts, just that they would offset the costs a little.

Hyundai has certainly come a long way from not that long ago when they were just a cheap also ran. They make some great cars today, and the Ioniq is no exception. Last I read it was beating everyone else in miles per kwh charged. The battery is a bit small though, so range is only 124 miles, which probably goes down in the cold and using heat or defrosters, or in the heat when using AC or when you are just blasting the stereo.

This may work in Korea when people have much shorter average commutes than here, but for the U.S. market I think the bare minimum entry point is a 200 mile EPA range for a BEV. Personally I would be more comfortable with slightly more. Maybe 230 miles.

That, and Teslas are not "falling apart". There have been a few instances of lemons that had problems, but every single carmaker has those. For some reason it just gets much more publicized and written about when it is a Tesla bumper that falls off. If that happens to someones brand new Ford Fiesta, no one seems to care or write about it.

Tesla is no longer a niche small car manufacturer. Q3 2018 (last numbers I could find) they delivered an annualized 320,000 cars per year. Sure, there's a long way to catch up with the likes of Toyota and their annual 10 million cars, but what it does mean is when you have a failure here or there, percentage wise it's in the noise level, and not really relevant.
 

Dodge245

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I agree with you btw, but I'm also taking into account the build quality of the Tesla's I've seen in person.. also ford was a bad example to choose... Ecoboom, faulty airbags are very recent ford failings that are currently in the news/public eye...
 

MrDeaf

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Hey, if Tesla stock goes down even more, it's probably a good time to buy, if you think Tesla can stand on its own.
It's not like they only sell cars either, because that Tesla solar roof and powerwall had lots of hype too.
 

iRevert

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Because it’s a Bolt...
Jokes aside the bolt uses a twist beam and the Kona is a multi-link rear and it really rides better than the bolt, part of that is that the Bolt just has super sucky seats and the underside of the car isn't smoothed and that adds a bit of wind/road noise. Day to day I'd take the Kona and it just feels better all around driving and if Hyundai moved the charging port it would be great. I didn't expect to like the kona but if I was in a position where I was just bombing around town or not doing long trips I'd consider it. Between winter and frequently working on in rural areas where there is zero point zero chance of a charger doesn't make it practical for me.

I don't think it's going to be a slam dunk of the next coming of EVJesus but I didn't mind the limited test drive I had with it.
 

NKD

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3750+2000=7500? Something doesn't add up here... You know what buy a Hyundai ioniq, at least that won't fall apart on you.
I never understood people complaining about something good. Are the cutting the price or no? Yes, they are! Are they taking a loss on profits or no? Yes they are!! So whats the issue? And whats up with this crap about falling apart? LOL I Know so many people with Telsa's they all love it. Gotta love, just cuz you hate them doesn't mean its falling apart on everyone.

Doesn't ioniq only have 125 mile range? not even in the same league. So stop comparing apples to oranges. Nothing against the ioniq.
 

BloodyIron

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For anyone paying attention, now's the time to buy Tesla stock. A big drop like that can lead to tasty margins. The production ramp up last year met their end target. This builds brand loyalty, which leads to future sales as production continues to ramp. It's a sound long term strategy.
 

UnrealCpu

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ii raced a model 3 on the highway with my civic type r and i i think his battery got weaker after 120mph or he couldnt keep up.
 

NKD

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ii raced a model 3 on the highway with my civic type r and i i think his battery got weaker after 120mph or he couldnt keep up.
how cool! Or may be he realized he was being an idiot and didn't want to kill himself and slowed down. Because Model 3 can go up to 140mph, he probably realized he didn't want to go any faster.
 
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UnrealCpu

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how cool! Or may be he realized he was being an idiot and didn't want to kill himself and slowed down. Because Model 3 can go up to 140mph, he probably realized he didn't want to go any faster.
Only 140mph im sure he would have had to drive back hometo charge again . He thought he was cool until i came along
 

NKD

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Only 140mph im sure he would have had to drive back hometo charge again . He thought he was cool until i came along
Alright lets do this. If he was driving at 120mph for 150 miles then yea you have a point. I am literally cutting his range more than half as if he was driving at 60 mph. All I am saying is you can't be sure why he slowed down. Maybe he didn't want to race you? If you want to feel better about yourself all power to you but I just think he slowed down because he was getting close to top speed or may be he didn't want to kill someone or himself. Its only cool until you end up either killing yourself or someone else on the freeway. My friend was an idiot and I happened to be in car with him in the passenger side and when he started racing, until he realized he was going so fast and there was a down slope and the car literlally lifted up in the air and almost lost control. Saved by luck. I personally hate people racing on the freeway so there is that. Never got in the car again with that fool.
 

EODetroit

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The TSLA stock was up almost 6% Friday... when did it drop 8%? Seems like the market overreacted, as usual, and then corrected itself.
 

NKD

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The TSLA stock was up almost 6% Friday... when did it drop 8%? Seems like the market overreacted, as usual, and then corrected itself.
cuz investors are bunch of cry babies. They delivered 90700 instead of 92000 that analyst expected lol, plus they are dropping price by 2000. Honestly its just a bunch of people cashing out after the earnings call.
 

Dodge245

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really? Thats what you rely on making your car purchase decision. A pool of 18000 people with no mention of number of each car.
Wow, so the fall apart remark was a bit of sarcasm, however it was based in a truth of the quality I've seen in these cars personally, ask your friends to line there cars up and take a look, each one will exhibit something not quite right, like the boot having a finger worth of space at one side but not the other, or the front bumper being further back than the lid, so they don't align, or the crease in the door not aligning to the back panel...

What I make my buying decision on is the quality I can see and feel, I wouldn't trust Tesla with 35-60k of my money... I'll keep my BMW 3 series m sport for now thanks..


Wrote on my phone, apologies for grammer/spelling
 

UnrealCpu

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Alright lets do this. If he was driving at 120mph for 150 miles then yea you have a point. I am literally cutting his range more than half as if he was driving at 60 mph. All I am saying is you can't be sure why he slowed down. Maybe he didn't want to race you? If you want to feel better about yourself all power to you but I just think he slowed down because he was getting close to top speed or may be he didn't want to kill someone or himself. Its only cool until you end up either killing yourself or someone else on the freeway. My friend was an idiot and I happened to be in car with him in the passenger side and when he started racing, until he realized he was going so fast and there was a down slope and the car literlally lifted up in the air and almost lost control. Saved by luck. I personally hate people racing on the freeway so there is that. Never got in the car again with that fool.
I stopped reading your reply after you said he was driving at at 60mph
 

maclem8223

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Who has never drove fast on the freeway BRO? Dont come on here and say you haven't
Lol, but that is not what you were doing was it? You were racing, or attempting to, not just going "fast". If you don't see the difference I can't help you. The fact that you bragged about it says it all..........bro.

Edit: And to answer your question, sure, I've gone fast (define fast?) on the freeway. What I haven't done is attempted to race some one on public roads as it is ridiculously irresponsible, immature, and shows a complete lack of concern for other people on the road. The fact you thought it is was cool makes whatever argument you may have thought you had to justify it null and void.
 

SolarisGuru

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Talking about crashing.

It's one thing to drive fast and be aware of what you're doing is dangerous, or be an overconfident fool who thinks it's no big deal, and actually a cool thing to do.
I was driving in a large city last night on the interstate and the speed limit was 55... I was doing 65-70 and people were blowing my doors off. A guy in a black BMW went flying by me going 90+ Mph... I can see going 65 or so, but damn, it was dusk and this asshat was doing at least 90 with no headlights... barely saw him. That shit is just ignorant.
 

Spire3660

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Alright lets do this. If he was driving at 120mph for 150 miles then yea you have a point. I am literally cutting his range more than half as if he was driving at 60 mph.
You should be thinking quadratically, not linearly. Doubling speed will definitely more than halve the runtime. I doubt a Tesla could run flat out at 120 MPH for 150 miles. Hell, my old '87 305 Trans Am would struggle with that kind of range/speed. (damn thing had a 13 gallon tank, just 2 gallons more than my modern Corolla)
 
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Alright lets do this. If he was driving at 120mph for 150 miles then yea you have a point. I am literally cutting his range more than half as if he was driving at 60 mph. All I am saying is you can't be sure why he slowed down. Maybe he didn't want to race you? If you want to feel better about yourself all power to you but I just think he slowed down because he was getting close to top speed or may be he didn't want to kill someone or himself. Its only cool until you end up either killing yourself or someone else on the freeway. My friend was an idiot and I happened to be in car with him in the passenger side and when he started racing, until he realized he was going so fast and there was a down slope and the car literlally lifted up in the air and almost lost control. Saved by luck. I personally hate people racing on the freeway so there is that. Never got in the car again with that fool.
The Model 3 isn't that fast (nothing like the S), and is close to the Type R in a straight line. However all the Tesla models have a weak top end, they are popular racers in the street racing world because light to light a Model S will beat a lot of cars, however past 90mph most cars will start to pull hard on them, and after 120mph pretty much all steam is gone and the other car will fly by. its why most people wont do roll races, only from a dig with a Tesla. Defending it's performance is wasted time, Tesla, at least the loaded Model S is a 1/8 and 1/4 terror, mostly because it takes zero skill to do it, as everything is computer controlled, however top speed runs or track use, it's not impressive to beat one, as those are it's weak points.
 

PeaKr

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There are a lot of asshats driving on the freeways who think they are pro cause they played forza, these people end up killing themselves or worse, killing others. I've seen it first hand, more than once. There are also people out there who can really drive. People who spent the time to learn exactly what their car is capable of doing, the differences between corners, how to approach, how your car lays down in a corner, when you can accelerate, when to slow down, how fast you can come to a stop, wind drag effects at high speeds, anticipating what other drivers are going to do and much much more. There's a reason Dodge doesn't let people test drive the Hellcat and btw, TESLAS ARE NOT RACE CARS! I would also comment that tsla as a company has a lot of obvious problems that can't be ignored as an investor.
 
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Vader1975

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Does this have to do with the tax credit or the 3000 model 3's sitting in inventory unsold?
 
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Does this have to do with the tax credit or the 3000 model 3's sitting in inventory unsold?
Having inventory is a good thing....

Having excess non revolving inventory is not. It is a balance, the problem before was issues in manufacturing where they could not even keep up with current orders, and that is never a good thing, every auto mfg has inventory, some of them are quite massive.

The price drop probably does have to do with the tax incentives, much the same way people on ebay jack up prices on goods when ebay runs a site wide 15-20% off code, it was more or less free money for them. Now that it is gone, they still need to sell cars, and can still make money by dropping the price, it's smart business.
 
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