Tesla has reduced prices on many of its models until at least March. The automaker’s cheapest model, the Model Y had a 20% reduction, making it eligible for the new $7,500 EV tax credit along with a $21,000 reduction in Tesla’s most expensive Model, the Model S Plaid ($190,000).
The Treasury Department and IRS released guidelines late last year that Tesla CEO Elon Musk disliked because the Model Y didn’t weigh enough to be deemed an SUV.
That means the vehicle is subject to the $55,000 price cap that applies to sedans, rather than the $80,000 limit for SUVs.
Tesla also made major reductions in countries including Germany, the UK and France a week after its second round of cuts in China just since October. This year Tesla came up short on its projection for annual vehicle deliveries. The company's stock fell as much as 5.5% to $120.00 a share after the announcement .
Last week, Bernstein analyst Toni Sacconaghi downgraded Tesla stock to a “sell rating,” citing the automaker's demand problem and that their models were too expensive to qualify for the new EV tax credit. “We believe Tesla will need to either reduce its growth targets (and run its factories below capacity) or sustain and potentially increase recent price cuts globally, pressuring margins,” Sacconaghi wrote in a Jan. 2 report. “We see demand problems remaining until Tesla is able to introduce a lower-priced offering in volume, which may only be in 2025."