Tesla cuts prices by $2,000 to offset reduced federal tax credit

on Jan2
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A Tesla Model 3 is seen in the general assembly line at the Tesla factory in Fremont, California, on Thursday, July 26, 2018.

Mason Trinca | The Washington Post | Getty Images

A Tesla Model 3 is seen in the general assembly line at the Tesla factory in Fremont, California, on Thursday, July 26, 2018.

Tesla is cutting the prices on all of its models by $2,000 to help offset a reduction in federal tax credits for drivers who buy electric vehicles.

The $7,500 federal tax credit for electric cars was cut in half as of Tuesday.

The company announced the price cut Wednesday as it released delivery results for the fourth quarter that disappointed investors and sent shares south by more than 9 percent.

Tesla said it made the move to soften the impact of falling federal tax credits. But some bearish investors are likely interpreting it as a move to stimulate demand, said Wedbush analyst Dan Ives.

“It was a move that was within the realm of possibility, but it caught investors off guard,” he said.



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