Tesla Slashes Prices by $2,000 in Lieu of Max EV Tax Credit

0 0 Editorial Team January 4, 2019 Edit this post

Tesla sold its 200,000th vehicle in 2018, which means the federal government is starting to phase out its EV tax credits. To soften the blow for customers, Tesla is dropping prices on its vehicles by $2,000.

Now that Tesla has cut prices, the Model 3 starts at $44,000 for the mid-range battery before incentives. The Model S now begins at $76,000, while the Model X can be had for $82,000 before incentives. The price cuts won't fully compensate for the reduced federal tax credits on offer. Starting January 1, the EV tax credit for Teslas dropped from $7,500 to $3,750.

Tesla reached the 200,000-vehicle threshold last July. It's the first company to begin the tax credit phase-out, which happens two calendar quarters after an automaker hits the 200,000 mark. The $3,750 tax credit will stay in effect until July 1, when it will decrease again to $1,875. In 2020, customers who take delivery of a Tesla won't get a federal tax credit.

In addition to the price cuts, Tesla also announced its fourth-quarter vehicle production and deliveries today. It made 86,555 vehicles in the quarter, including 61,394 copies of the Model 3. Tesla says this number is in line with its projections, and increased 15 percent from Q3. Following a similar trajectory, Q4 deliveries totaled 90,700 vehicles, including 63,150 Model 3s, up 13 percent from the previous quarter. Still, as CNBC reports, total deliveries fell short of Wall Street estimates forecasting Tesla would move 92,000 vehicles, including 64,900 copies of the Model 3.

For the entire calendar year, Tesla delivered 245,240 vehicles, including 145,846 Model 3s. "To put our growth into perspective, we delivered almost as many vehicles in 2018 as we did in all prior years combined," Tesla said in a release.

Tesla says it will bring the Model 3 to Europe and China in February. Later in the year, the car will roll out to additional markets, including a right-hand drive variant. Tesla once again mentioned lower-priced variants will help expand Model 3 sales, but so far we have yet to see the elusive $35,000 model Musk promised when the Model 3 debuted.