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Tesla Inc shares tanked on Thursday after the luxury electric car maker started offering $7,500 discounts on Model 3 and Model Y vehicles delivered in the United States this month, fueling concerns the company is facing softening demand as economies slow.
On December 1, Tesla started offering a $3,750 "credit" on Model 3 and Model Y vehicles delivered before the end of the year. It raised the credit to $7,500 on Wednesday. It also recently started offering free supercharging for 10,000 miles (16,093 kms) for vehicles delivered in December.
The rare discounts follow a series of price hikes over the past couple of years by Tesla, which blamed supply chain disruption and inflation.
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Tesla underperformed the broader market, which fell as data showing a resilient economy fueled worries over the Federal Reserve's path on hiking interest rates.
Market estimates
Analysts have reduced their estimates for Tesla's vehicle deliveries for the current quarter, reflecting slowing growth in key markets like the United States and China.
"The fact they seem to be cutting price to increase deliveries volumes doesn't raise confidence, particularly at a time where we see increasing competition," Craig Irwin, a senior analyst at ROTH Capital Partners, said.
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The latest discount came just days after the U.S. Treasury Department delayed restrictions on EV incentives until March, meaning Tesla and other U.S.-made electric vehicles will be likely to qualify for the full $7,500 in incentives starting in January.
Tesla is also offering a $5,000 credit in Canada on Model 3 and Model Y vehicles delivered before the end of the year. The automaker has also given a discount of 6,000 yuan ($860) on some models in China to the end of 2022.
Tesla said in October it would miss its vehicle delivery target this year, but downplayed concerns about demand after its revenue missed Wall Street estimates.
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