Tesla offers rare year-end discounts

Tesla Inc is offering rare discounts through year’s end on its two top-selling models, an indication that demand is slowing for its electric vehicles.

The Austin, Texas, company started offering a US$3,750 incentive on its Model 3 sedan and Model Y SUV on its website earlier this month, but on Wednesday doubled the discount to US$7,500 for those who take delivery up to December 31.

The move comes ahead of a new federal tax credit of up to $7,500 that’s scheduled to take effect January 1. Teslas weren’t eligible for a previous federal tax credit program because the company had reached a limit of 200,000 vehicles sold. Next year’s credits don’t have such a limit.

“This is a sign of demand cracks and not a good sign for Tesla heading into the December year end,” Wedbush analyst Dan Ives said in an email. “EV competition is increasing across the board, and Tesla is seeing some demand headwinds.”

Lower priced versions of the Models 3 and Y will be eligible for the federal tax credit come January due to limits on vehicle purchase prices outlined in the Inflation Reduction Act.

Without the discounts, the Model 3 starts at just over US$48,000 including shipping, while the Y has a starting price of just over US$67,000. To be eligible for the federal tax credit, vehicles can’t have a sticker price of over US$55,000 for sedans and US$80,000 for trucks and SUVs.

Tesla may be offering the discounts to juice sales before the end of the year in an effort to meet a pledge to grow vehicle sales by 50 per cent.

Industry analysts polled by data provider FactSet expect Tesla to deliver 431,000 vehicles in the fourth quarter, ending the year at 1,341 million.