Tesla Will Cut Prices To Combat Tax Credit Phase Out

Tesla is cutting its car prices in the United States by $2,000 to combat a cut in a federal tax credit for its buyers. 'Tesla triggered the tax credit phase-out in July when it became the first car maker in the United States to sell more than 200,000 plug-in vehicles,' reports CNN. 'The government designed the credit to be phased out for each automaker once it reaches that milestone.' From the report: Before that benchmark, Tesla buyers were entitled to a tax credit of $7,500 for purchasing a plug-in electric car. But as of January 1, Tesla buyers will only get half that credit, or $3,750, for the next six months. The credit falls to $1,875 in July, and then disappears in 2020. The tax credit phase-out comes just as Tesla was preparing to sell a $35,000 version of its Model 3 sedan, the first time it will be taking aim at the price-conscious mass market. CEO Elon Musk said in an interview on '60 Minutes' that he expects the lower-priced version of the Model 3 to be available in five to six months.

Tesla also reported strong production and sales for the just completed fourth quarter. Total sales were up 8% and Model 3 sales were up even more, about 13%, to 63,150 vehicles. That works out to an average of about 4,900 Model 3s per week in the quarter, putting it in range of its goal of 5,000 Model 3's a week.

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