Tesla shares fall 7.6% following price cuts in China and Elon Musk’s promise to reimburse missed tax credits
Monday was a tough day for the U.S. stock market, but Tesla shares were hit especially hard. The stock fell by 7.6 percent after Tesla cut the Model 3â€™s price in China and CEO Elon Musk promised to reimburse U.S. customers if they miss a tax credit deadline due to Model 3 shipment delays.
Reuters reported this weekend that the Model 3â€™s prices on Teslaâ€™s China website had been reduced by up to 7.6 percent, with the starting price now at 499,000 RMB (about $72,000). This is the third time since November that Tesla has lowered the price of its vehicles in China.
The first was in November, when it slashed the price of Model X and Model S vehicles by 12 to 26 percent, stating that it was â€œabsorbing a significant part of the tariff to help make cars more affordable for customers in China.â€� Then this month, Tesla cut Model X and Model S prices again, citing Chinaâ€™s decision to temporarily suspend a new 25 percent tariff on American-produced vehicles and auto parts as the two countries reached a ceasefire in the trade war.
In October, Tesla announced on its site that if U.S. customers needed to order a Model S, Model X, or Model 3 before October 15 if they wanted the full $7,500 federal tax credit, which begins to phase out once a manufacturer sells 200,000 qualifying vehicles in the U.S. (Tesla hit that milestone earlier this year). As a result, the federal tax vehicle will be cut 50 percent to $3,750 for vehicles delivered January 1 to June 30, 2019, before behing halved again on July 1.
On Sunday, Musk tweeted in response to a question that if a customerâ€™s pre-December order isnâ€™t delivered before the end of the year, Tesla will reimburse the tax credits they missed out on.
If Tesla committed delivery & customer made good faith efforts to receive before year end, Tesla will cover the tax credit difference
After months of production and delivery delays, Tesla ramped up fulfillment of Model 3 orders in the third quarter of this year, when it delivered a total of 83,500 vehicles, including 55,840 Model 3 units.
Source: Techcrunch Disrupt