Tesla CEO Elon Musk has gone on record stating that the company is going to reimburse customers if delivery delays wind up being the cause of them missing out on a tax credit that will be cut in half after the end of 2018. Tax credits for electric vehicles are available on the first 200,000 vehicles sold by any given automaker. After that, the credit is cut in half every six months until it phases out completely. Earlier this year, Tesla told its customers that orders placed by October 15th would be eligible for the full credit of $7500 and that customers would also receive their cars by the end of the year.
On January 1, this tax credit is cut in half to $3750.
As crunch time approaches, customers who have already ordered vehicles and have been waiting on them to be delivered have started to complain on social media – not only about delays in receiving their vehicles, but also in a lack of communication from the company.
And in the "management by Twitter" style that Elon Musk has reportedly employed - focusing on and micromanaging one problem at a time, instead of trying to arrive at broader scale solutions – Musk proclaimed to one customer that Tesla would "cover the tax credit difference" if Tesla had committed to delivery and the customer had made "good faith" efforts to get their car before 2019.
If Tesla committed delivery & customer made good faith efforts to receive before year end, Tesla will cover the tax credit difference— Elon Musk (@elonmusk) December 22, 2018
Recall, in a recent expose, one former SolarCity employee stated:
“We called it management by Twitter. Some customer would tweet some random complaint, and then we would be ordered to drop everything and spend a week on some problem affecting one loudmouth in Pasadena, rather than all the work we’re supposed to do to support the thousands of customers who didn’t tweet that day.”
Musk also said on Twitter this weekend that orders for the mid-range Model 3 should all be delivered by the end of the year.
This news comes after Tesla has once again cut prices on its Model 3 in China. The latest discount - of up to 7.6% – may be an indication that demand in China is still lagging expectations. This was the third time in the last two months that Tesla has changed its prices in China. Back in November, the company cut the prices of its Model X and Model S vehicles by 12% and 26%, respectively. Tesla claimed at the time that it was “absorbing a significant part of the tariff to help make cars more affordable for customers in China”.
Given the fact that Tesla is now supposedly in a good enough financial position to not only absorb the cost of tariffs, but also to make up the difference in customers' tax credits, we’re sure it’s just going to be a happy and healthy runway of nonstop profitability and cash generation from this point forward.
Not surprisingly, the market was less than excited by the margin-compressing news, pushing TSLA stock over 2% lower, even though it has a way to go before catching down to the growing skepticism exhibited by Tesla bondholders.