DETROIT (AP) — With its sales slowing and its stock price tumbling, Tesla Inc. slashed prices dramatically Friday on several versions of its electric vehicles, making some of its models eligible for a new federal tax credit that could help spur buyer interest.
The company dropped prices nearly 20% in the United States on some versions of the Model Y SUV, its top seller. That cut will make more versions of the Model Y eligible for a $7,500 U.S. electric vehicle tax credit that will be available through March. It also reduced the base price of the Model 3, its least expensive model, by about 6%.
Far from pleasing investors, the sharp price cuts sent Tesla shares sinking about 4% in early trading Friday. Since the start of the year, the stock has plummeted more than 65%. Many investors fear that the sales slowdown will persist and have grown concerned about the erratic behavior of CEO Elon Musk and the distractions caused by his $44 billion purchase of Twitter.
Itay Michaeli, an industry analyst at Citi, wrote in a note to investors that Tesla appears to be prioritizing sales volume over price — a strategy that could affect its profit margins, at least in the near term.
Messages were left Friday seeking comment from Tesla on the reasons for the price cuts.