Tesla's Big New Discount Raises Concerns

In assessing Elon Musk's business strategy at Tesla, the Wall Street Journal observes that Musk "has frequently boasted how Tesla stands apart from traditional car companies by not relying on the kind of marketing tools, such as advertisements or discounting, to goose demand." Consider demand goosed, in a big way. Tesla is now offering a $7,500 discount in the US to anyone who buys a Model 3 or Model Y before the end of the year, reports Mashable. It's also offering similar, if smaller, discounts in Mexico and Canada, all of which is "adding to indications the carmaker is struggling with demand," per Fortune. In Thursday's trading, Tesla shares fell by about 9%, and the stock is down 60% for the year.

Mashable also notes that Musk has previously vowed never to offer a discount unless there is "an underlying rationale." The best guess is that the underlying rationale in this case is weak quarterly sales numbers—perhaps exacerbated by the fact that a renewed US federal tax credit for Teslas is expected to be offered again in early 2023. In addition to the discount, the company also is offering new buyers 10,000 miles of free supercharging in the US. A post at electrek also wonders about "softening demand in North America" for Tesla and digs into how changing EV incentives might be a factor in the big US discount. (More Tesla stories.)