Tesla discounting in the Canadian and Mexican markets has sparked concerns about future demand.

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Tesla discounting in the Canadian and Mexican markets has sparked concerns about future demand. For Canadian and Mexican customers, Tesla is currently offering a credit of CAD 5,000 / MXN 74,750 on purchases of a Model 3 or Model Y before the end of the year. It’s unusual for Tesla to offer discounts like this, which could indicate a waning interest in the North American market.

This comes after Tesla’s similar year-end discount increase to $7,500 in the US.

While Tesla’s website describes the discount as a “credit,” the “Learn More” link only describes the details of the recently announced supercharger credit, which has been available since December 15.

Any new Tesla vehicle delivered between December 15 and December 31, 2022, will come with free Supercharging credits* good for up to 10,000 kilometers of driving. The two years of free Supercharging will be added to your Tesla Account in January 2023 and begin on the delivery date.

The middle vehicle is priced at CAD 59,990, the same as a custom-order configured vehicle with the exact base model specifications. We are still determining how the CAD 5,000 discount off the website price will be applied, but it will be given to customers who purchase a car from the dealership’s inventory. If you want to know the specifics, you’ll have to consult with a Tesla salesperson.

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The additional US discount announced on Wednesday is nearly identical to the Canadian and Mexican discounts. Considering the increase in the US discount that Tesla implemented, both amounts are close to $3,750.

This price cut was widely seen as a reaction to shifting EV tax incentives in the United States. The Inflation Reduction Act had made it so that Teslas would only be eligible for $3,750 in EV tax credits in 2019; the Treasury announced Monday that they would be delaying new rules until at least some point in March. Teslas will now be eligible for $7,500 in tax credits. Given that some customers may wait a few weeks to buy to take advantage of the new tax credits, it makes sense for Tesla to offer a temporary discount if it wants to move vehicles immediately.

Although a similar adjustment to tax credits will be implemented in the United States at the beginning of the year, Canada and Mexico will not. This could mean that Tesla expects a lighter order book than usual this holiday season and is trying to drum up business by offering an unusual incentive to potential customers.

It is common practice at Tesla to make a final push for deliveries at the end of the quarter or year, with the emphasis on all employees getting as many cars out the door as possible in the final weeks of the quarter. Over the years, there have been repeated claims that the company would like to end its practice of conducting delivery push at the end of each quarter, but this has never resulted in the desired change.

Usually, CEO Musk sends an all-hands motivational e-mail (with frequent overuse of the word “hardcore”), but he’s currently a bit preoccupied with other things. He can’t entirely focus on Tesla as much as he should. Free supercharging is just one example of a perk that Tesla occasionally offers to lure in new customers at the end of the year. However, in an unusual move, Tesla discounts their vehicles to attract customers.

The rising demand for electric vehicles and the associated rise in supply costs have resulted in considerable price increases for Tesla vehicles over the past year. Prices for many EVs have increased due to the supply of EVs falling short of consumer demand.

However, in recent months, the auto market has begun to stabilize, with prices for both new and pre-owned vehicles leveling after years of steady increases.

Consequently, the new price cut does not compensate for the price hikes this year but reverses the trend in Tesla’s price increases. However, this decline is only temporary, or it may indicate that Tesla’s price increases have gotten a little too zealous. The company may need to correct in the opposite direction due to softening demand in North America.

Commentary from Electrek

According to Fred’s original Take on Tesla’s $3,750 US price cut, the company has always kept up with demand and has, therefore, never had to resort to discounting. He said that if Tesla started ignoring it, that would be a sign that demand was falling.

Discounts in the US are a reaction to recent changes in tax credits.

However, a response to new government incentives cannot account for the price reduction. The rule only applies to vehicles manufactured in North America, not Europe or Asia, where most automobiles are assembled. It’s possible that Tesla has amassed an excessive amount of NA stock and is looking to unload some of it to clear space on the books before the end of the fiscal year.

Perhaps Tesla wanted to be consistent with its pricing in different regions, but if that were the case, it would have made more sense to charge the same amount everywhere.