Tesla Rings In 2019 With Price Cuts

[William Maley]

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A new year marks the beginning of the reduction of the federal tax credit for Tesla - from $7,500 down to $3,750. To counteract the reductions, Tesla has instituted a $2,000 price cut on all models. Here is how the pricing looks like,

Model 3

• $45,200, Mid-Range
• $52,200, Long Range
• $63,200, Performance

Model S

• $77,200, 75D
• $95,200, 100D
• $134,200, P100D

Model X

• $83,200, 75D
• $98,200, 100D
• $139,200 P100D

This reduction comes on the same day that Tesla announced fourth quarter production numbers. The past few months saw Tesla making cuts in colors and equipment to help reach their goal of delivering 100,000 Model S and X vehicles by the end of this year - they narrowly missed it with 99,394 deliveries. For the Model 3, Tesla was able to deliver 145,846 vehicles in 2018.

Source: Bloomberg, Tesla

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Tesla Q4 2018 Vehicle Production & Deliveries, Also Announcing $2,000 Price Reduction in US

PALO ALTO, Calif., Jan. 02, 2019 (GLOBE NEWSWIRE) --In Q4, we produced and delivered at the rate of nearly 1,000 vehicles per day, setting new company records for both production and deliveries.

Production in Q4 grew to 86,555 vehicles, 8% more than our prior all-time high in Q3. This included:

• 61,394 Model 3 vehicles, in line with our guidance and 15% more than Q3.
• 25,161 Model S and X vehicles, consistent with our long-term run rate of approximately 100,000 per year.

Q4 deliveries grew to 90,700 vehicles, which was 8% more than our prior all time-high in Q3. This included 63,150 Model 3 (13% growth over Q3), 13,500 Model S, and 14,050 Model X vehicles.

In 2018, we delivered a total of 245,240 vehicles: 145,846 Model 3 and 99,394 Model S and X. To put our growth into perspective, we delivered almost as many vehicles in 2018 as we did in all prior years combined.

Our Q4 Model 3 deliveries were limited to mid- and higher-priced variants, cash/loan transactions, and North American customers only. More than three quarters of Model 3 orders in Q4 came from new customers, rather than reservation holders.

There remain significant opportunities to continue to grow Model 3 sales by expanding to international markets, introducing lower-priced variants and offering leasing. International deliveries in Europe and China will start in February 2019. Expansion of Model 3 sales to other markets, including with a right-hand drive variant, will occur later in 2019.

1,010 Model 3 vehicles and 1,897 Model S and X vehicles were in transit to customers at the end of Q4, and will be delivered in early Q1 2019. Our inventory levels remain the smallest in the automotive industry, and we were able to reduce vehicles in transit to customers by significantly improving our logistics system in North America.

Moving beyond the success of Q4, we are taking steps to partially absorb the reduction of the federal EV tax credit (which, as of January 1st, dropped from $7,500 to $3,750). Starting today, we are reducing the price of Model S, Model X and Model 3 vehicles in the U.S. by $2,000. Customers can apply to receive the $3,750 federal tax credit for new deliveries starting on January 1, 2019, and may also be eligible for several state and local electric vehicle and utility incentives, which range up to $4,000. Combined with the reduced costs of maintenance and of charging a Tesla versus paying for gas at the pump – which can result in up to $100 per month or more in savings – this means our vehicles are even more affordable than similarly priced gasoline vehicles.

Tesla’s achievements in 2018 likely represent the biggest single-year growth in the history of the automotive industry. We started the year with a delivery run rate of about 120,000 vehicles per year and ended it at more than 350,000 vehicles per year – an increase of almost 3X. As a result, we’re starting to make a tangible impact on accelerating the world to sustainable energy. Additionally, 2018 was the first time in decades that an American car – the Model 3 – was the best-selling premium vehicle in the U.S. for the full year, with U.S. sales of Model 3 roughly double those of the runner up.

We want to thank our customers, suppliers, investors, and especially our employees, who worked so hard to accomplish this.

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[Drew Dowdell]

That's actually a phenomenal performance for Tesla.  145,846 Model 3 is just about equal to what Mercedes Benz will sell of  CLA, C-Class, E-Class, and CLS combined this year. (They were at 135k YTD for those 4 models back in November)

[balthazar]

25 minutes ago, Drew Dowdell said:

That's actually a phenomenal performance for Tesla.

Yep! Now, if they could wrangle a $10,000 price cut so the Model 3 could actually retail for what it was delivered as being at, the numbers would really rise.

[G. David Felt]

Excited to see what GM shows off for EVs this year and to get to sit in and test drive the MB EQC.

[Suaviloquent]

Probably the $35,000 model will never arrive and Tesla will go halfway and start at $40,000.

As well I think depending on timing, they're never make the smallest battery pack. Instead they'll offer a longer range standard.

And you know? People will be upset at the bait and switch, but there will be no uproar. Cancellations are not a problem anymore - Tesla now has cash flow because they finally make enough cars. They're not out of the woods yet, but they just gotta start making more cars. 

 

[oldshurst442]

On 1/2/2019 at 3:02 PM, balthazar said:

Yep! Now, if they could wrangle a $10,000 price cut so the Model 3 could actually retail for what it was delivered as being at, the numbers would really rise.

 

5 minutes ago, Suaviloquent said:

Probably the $35,000 model will never arrive and Tesla will go halfway and start at $40,000.

As well I think depending on timing, they're never make the smallest battery pack. Instead they'll offer a longer range standard.

And you know? People will be upset at the bait and switch, but there will be no uproar. Cancellations are not a problem anymore - Tesla now has cash flow because they finally make enough cars. They're not out of the woods yet, but they just gotta start making more cars. 

 

 

Could be true what you are sayin Sauv that a 35K model may never arrive.  

What Im asking here is:

Will it really make a difference in sales if the Model 3 never gets to be 35K?  I said in the past that when Tesla makes their base car ready for production that their sales for the Model 3 will be that much greater, (that is why I quoted Balthy as he thinks that too) 

But, if  eventually 40K becomes THE base model for mid-range and no lesser range model exists for 35K, I do not think people will care and sales of the Model 3 will continue to grow.  It is proven that people accept a 50K and more Model 3.  So why lose 5 000 dollars on transaction prices when @40 000, Tesla could sell just as many Model 3s. The image of Tesla is high enough that people would be happy to fork over 5 000 dollars more for a bigger battery as opposed to be driving around in a 35 000 dollar version with a lesser battery. 

This is how I view it. 

[balthazar]

Right now Tesla is straining to meet demand, back orders AND production marks. They have zero incentive or WANT to bring out a lower priced 3. Maybe in the future when sales trail downward and capacity exceeds demand, but not within the next 2 years, I'd bet. I agree with Suav- I don't see a backlash coming if they don't... but we'll have to wait & see. There WAS a backlash at the lo-ooong ramp up of the 3, so....

[daves87rs]

Short term cut I think. I actually expect the prices to head up even further....

[balthazar]

As I stated elsewhere; a tax credit cut of $3750 and a MSRP dip of $2000 means the (effective) Tesla price just INCREASED by $1750. 6 months from now the price will 'increase' yet again by $1875. That's $3625 in a year or so; a considerable chunk for an already expensive vehicle.