Tesla cuts vehicle prices by $2,000 to offset shrinking EV tax credit

Tesla knocked $2,000 off of the prices of its cars in the US on Wednesday to help offset a recent reduction of the federal electric vehicle tax credit.

The automaker also announced initial delivery and production numbers for the fourth quarter of 2018, showing that the frenzied pace it carried through most of the year — led by the big Model 3 push — helped Tesla set new company records, even though it cooled toward the end.

The cheapest Model 3 (a “midrange” rear-wheel drive version announced in October) will now start at $44,000.

The base Model S now costs $76,000, and the most affordable Model X now starts at $82,000. (Prices for the base Models S and X went up in November.)


Tesla’s pace of production and deliveries tapered off slightly at the end of 2018, according to the release from Wednesday.

The automaker manufactured a total of 86,555 vehicles in the fourth quarter, and it delivered 90,700, both of which are record numbers for Tesla.

But those numbers only represented increases of about 8 percent compared to the third quarter figures. Tesla had nearly doubled its overall production and delivery numbers from the second to the third quarter of 2018, and it saw similar growth from the first quarter to the second.

Still, Tesla made about 253,000 cars in 2018 and delivered about 245,000. That’s a far cry from the goal of making 500,000 that Musk once targeted for 2018, but it’s more than double the output of 2017 when the company made around 101,00 cars and delivered about 102,000.

That’s not bad for a company that had such a roller coaster of a year.


The EV tax credit was started during the Obama administration in order to encourage customers to buy plug-in electric or hybrid vehicles and also incentivize automakers to invest in the technology.

The credit was never meant to be permanent, though, and so it was designed to slowly phase out once an automaker delivered its 200,000th eligible car in the US.

Tesla became the first company to pass this mark last summer, which meant that the full amount offered by the IRS would drop from $7,500 to $3,750 starting on January 1st, 2019.


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