Tesla is offering a $3,750 credit to US customers on Model 3 and Model Y cars until the end of the year.

It's a rare move for the automaker, whose CEO, Elon Musk, has often said that Tesla wouldn't discount new cars.

According to a report by Electrek, which cites sources familiar with the matter, Tesla has seen an uptick in order cancellations due to long delivery wait times, leading some customers to change their minds about a car purchase between the time they placed car orders and the date of delivery.

The report also said that some customers are pushing electric vehicle deliveries into the start of 2023 to take advantage of the Biden Administration's new EV tax credit.

The credit, which takes effect in 2023, is part of the Inflation Reduction Act signed by President Biden in August and extends current federal tax credits. The credit is worth up to $7,500, and Tesla's Model 3 & Model Y are both eligible beginning in 2023.

By trying to push new vehicles out the door by the end of the fourth quarter, Tesla may be looking to avoid another disappointing quarter of deliveries. In the third quarter, Tesla reported delivering 343,000 electric cars, falling short of analysts' expectations of 364,660 deliveries.

The Chinese journalist Yan Chang was the first to report that Giga Shanghai would have a production cut. Bloomberg and Reuters heard about that and confirmed the information with their sources: Tesla is indeed lowering production numbers in its Chinese plant to meet the decreasing demand in that market.
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According to Yan Chang’s sources, the Model Y production hours were reduced from 11.5 to 9.5 hours. The company also took a break from November 28 until December 2, which made him suspect Tesla could try to give it a “hardware revision.” He must have guessed it could try to build its Chinese Model Y like the Texan EV, with two massive castings for the front and rear structure and a structural battery pack. Although that is what Tesla should do in all its factories soon, that depends on having 4680 cells in China or using CATL’s or BYD’s systems compatible with the idea.

Bloomberg did not mention how Tesla cut production at Giga Shanghai, but its sources said the measures allowed the EV maker to produce 20% fewer cars. If the factory can make around 90,000 cars per month, that reduction is equivalent to 18,000 vehicles. In other words, Tesla intends to make only 72,000 EVs monthly.

Curiously, the China Passenger Car Association (CPCA) said that Tesla delivered 100,291 in China in November. That must refer almost exclusively to the Model 3 and Model Y made in the country. That’s the best monthly result Tesla has ever presented in China.

That may sound like extraordinary news if you ignore that this figure was due to less demand in foreign markets, leaving most of the local production to be absorbed by Chinese customers. That drove lead times for the Model Y and Model 3 to drop sharply there. According to Bloomberg, Tesla delivers any derivative of these two models within a month, if not less. Customers in the U.S. are experiencing the same: some got a VIN 12 hours after ordering a new car.

Reuters added that the production cut will be superior to 20% and that the EV maker is facing high inventory levels. For a company that says it only manufactures EVs that a customer already ordered, this is weird. After all, all vehicles should already have owners: they just need to be delivered.

One possible explanation is that rejection at delivery may have increased, leaving Tesla with vehicles it will have to sell to someone else because the original buyer did not want a defective car. The list of complaints includes loose trim, cut seats, peeled paint, foggy headlights and taillights, and uneven panel gaps, to name those from the top of our heads.

Giga Shanghai was created to become an export hub. With Europe getting cars from Giga Grünheide, Tesla may have to expand to new markets, which will be difficult because all its service centers and Supercharging stations belong to the EV maker. In other words, it will have to make massive investments just to have new markets for its Chinese EVs. At the end of the day, that may not make much sense.

Gigafactory Berlin remains a sore spot in Tesla’s otherwise impressive operations. The production ramp-up is not going to plan, as the plant lags behind other Tesla factories. One of the reasons is Tesla’s difficulties in recruiting staff in a highly competitive German labor market.
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Tesla’s Gigafactory Berlin grappled with headwinds even before the construction workers broke ground. The environmentalist organizations opposed the factory, citing deforestation and water supply issues. Protests pushed the plant opening way past its due date, although Tesla eventually addressed all concerns and finally opened the production lines in Gruenheide. But even so, production ramp-up is slower than at other Tesla gigafactories, including the recently opened Giga Texas.

Tesla targeted a weekly production of 5,000 vehicles by the end of 2022, but as of October, the pace has only reached 2,000 units per week. It will be higher than that by year’s end, but still far from the projected numbers and the company’s other gigafactories. According to Tesla data tracker Troy Teslike, Giga Shanghai reached a 20,000-unit production after 100 days, and Giga Texas achieved the same feat in 151 days. In the case of Giga Berlin, this happened after 187 days.

Beyond the initial delays, one of the reasons for this appalling performance is the lack of personnel, which has prevented the deployment of a third shift. The shift was supposed to be implemented in September, but it has been pushed back. Tesla is finding it difficult to recruit enough workers at Gigafactory Berlin, mainly because it pays significantly less than the industry average in Germany and the work conditions are less encouraging. This has also led to a high turnover at the plant.

To get to the planned 5,000-unit production pace, Tesla needed 12,000 workers, but it has hired only around 7,000 by now. Also, the American EV maker is bleeding experienced personnel to other companies, according to former and current employees at the gigafactory who spoke to Wired. Current staffers are leaving jobs in drove due to low and unequal pay as well as inexperienced management in the highly competitive German manufacturing sector. One current employee, speaking under condition of anonymity out of fear of losing their job, described the situation as “total chaos.”

“Some people are off sick longer than they’ve actually worked,” they said to Wired. “There are people whom I haven’t seen working for three weeks in six months. Many people are signed off sick because the motivation isn’t there.”

Local labor specialists consulted by Wired confirmed the situation and said it is unlikely Tesla will be able to find more qualified workers to fill the gap. Tesla has got an image of an unattractive employer in the heavily unionized German automotive sector. To worsen the situation, Tesla has to compete with Volkswagen for skilled workers in the Berlin area. According to the German union IG Metall, Tesla pays 20% less than similar businesses based on staff contracts and job descriptions.

In June, a survey showed that Tesla dropped from being the second-most preferred employer for engineering graduates in Germany to sixth. Tesla fares worse than other German carmakers now, and some respondents indicated that Musk’s comments about firing employees who wanted to work from home were an important reason.

As usual, the year’s end is not the best for car sales, but the situation is even worse this year. Tesla is pushing hard to improve demand for its vehicles and is throwing everything at it. In the latest move, the EV maker has doubled the discount offered to U.S. customers, while introducing a credit worth 5,000 CAD (around 3,670 USD) in Canada.
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When it put incentives and price cuts in place, Tesla admitted that demand for its cars was not as strong as it wanted. The reasons for lower demand are diverse, but in the U.S., they’re mostly related to the Inflation Reduction Act (IRA) tax credits coming into effect on January 1. Because the tax credit is only offered for electric vehicles delivered next year, many people postponed the acquisition. Moreover, multiple customers were canceling their pending orders because they were unsure if the cars would be delivered after January 1, 2023.

Whatever the cause, the drop in demand sounded an alarm at Tesla, especially as the inventory started to build. Indeed, it is now possible to buy a Tesla EV from the existing inventory instead of building it. Not only that, but the “Buy Now” button on the Tesla website leads directly to the Inventory portal. Not that the “December 2022” delivery estimate in the “Build your custom Tesla” section would be excruciatingly long.

To make people keep their orders and move the cars from the inventory, Tesla offered a $3,750 discount in the U.S. in early December, which coincidentally was exactly half the IRA tax credit. It didn’t help very much because two weeks later, it also threw 10,000 miles of free Supercharging into the mix. These are the equivalent of about $1,000 worth of free Supercharging and can be used up to two years after the car is delivered.

Guess what? It still wasn’t enough because Tesla felt the need to double the discount offered to its U.S. customers to $7,500. This equals the full IRA tax credit, and the best part is that the 10,000 free Supercharging miles are still on the table. There’s no reason to delay or cancel the acquisition anymore, at least none related to the IRA tax credits.

There are some conditions, though. First, the discount only applies to Model 3 and Model Y orders, although Model S and Model X buyers still get the free Supercharging miles. And second, it’s only for vehicles delivered by December 31. This is not a problem because the IRA tax credit takes over from then, ensuring a similar advantage.

The Canadian customers watched in awe as the U.S. got all the benefits, but hours later, Tesla made a similar announcement. It is not as generous as it was south of the border, but still enticing. Specifically, Canadians get a similar free Supercharging credit, although it’s 10,000 kilometers (about 6,200 miles) instead of 10,000 miles. The discount is also more modest, at 5,000 CAD (around 3,670 USD). According to Canadian media, there are currently over 200 Model 3 and Model Y cars in Tesla’s inventory across Canada.

If you need another sign that Tesla is in deep trouble, you just have to look at the used car market. Used Teslas are now cheaper than ever, which means demand for new cars will also tank soon, and people who expected to make a profit by flipping their Tesla are now stuck with it.
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The demand for new Tesla vehicles was so high this year that used-car prices climbed well above the MSRP. It wasn’t just for Tesla or electric cars, as many in-demand models were sold over the MSRP on the used-car market. Dealers also made things worse, with tens of thousands of dollar markups for the hottest models. But Teslas usually were a special case, thanks to insanely-high prices, which peaked at just under $70,000 in August.

This has created a new business for many people who would buy Teslas one after another and then sell them for a sizeable profit. Again, this was a trend we saw for other car makes and models, with the GMC Hummer EV and Ford Bronco as the main culprits, but none of them got to the level of Tesla’s most popular models. The phenomenon even got Elon Musk’s ire, resulting in flippers being banned from ever buying a Tesla ever again.

Nevertheless, the times are changing, and probably Elon Musk would love to have those guys buying Teslas in droves again. This trend may be over now because the used Tesla prices are in free fall and have been declining for the past four months. According to the CarGurus used-car index, used Tesla median prices were the highest at the end of July, at $67,915. They have been deep diving ever since, reaching $54,200 on Christmas day. That’s a whopping 20% drop in value for the average used Tesla in a used car market that only declined 7% over the same period.

This is only one side of the story because Tesla cars are also spending more time on dealer lots, despite their lower prices. Edmunds data cited by Reuters show that Teslas usually take 50 days to sell, compared to the 38-day average for all used cars. We can say that Tesla prices were in a bubble, and that bubble burst, leaving many people with hard-to-sell EVs and possibly, even more on the way. After all, those cars in Tesla’s inventory didn’t appear out of the blue; there must’ve been people canceling their orders.

With this, another effect comes into play and hammers another nail in the coffin for Tesla. With prices so low on the used car market and many new orders canceled, it’s no wonder why Tesla took measures to trim production at Giga Shanghai. Depending on how this situation evolves throughout 2023, Tesla might be in for a brutal awakening. Since the end of the year is usually a time to make wild predictions, here’s ours: Tesla’s new prices will also fall significantly in 2023. After all, Tesla bragged about insanely-high margins in 2022, and there’s no reason to keep those margins if nobody buys the cars.

Tesla has already started discounting its cars in several markets, with China in the pole position. Not more than a year ago, Musk said it has enough on his plate, dismissing the idea that Tesla needed a cheaper product. The current market trends show that good leaders plan in advance, not blinded by momentary success. If Tesla still wants to grow next year, it desperately needs another product. And that is beyond the Cybertruck, which will have to be a resounding success to keep Tesla’s dream going.

With 2023 right around the corner, states across the country will see new laws and regulations go on the books. In California, a new law will go into effect that bans Tesla from advertising their vehicles as “fully self-driving.” It’s a blanket law that affects every automaker looking to venture into the semi-automated driving technology space. It also applies to dealers and goes into effect on January 1.

California governor Gavin Newsom signed the legislation in September. It dictates that automakers must clearly describe the functions and limitations of any partial driving automation technology on the vehicle or added later through a software update. Tesla states on its website that its cars’ “Full Self-Driving” features require “active driver supervision and do not make the vehicle autonomous.” The crux of the bill that could affect Tesla is:


“(b) A manufacturer or dealer shall not name any partial driving automation feature, or describe any partial driving automation feature in marketing materials, using language that implies or would otherwise lead a reasonable person to believe, that the feature allows the vehicle to function as an autonomous vehicle, as defined in Section 38750, or otherwise has functionality not actually included in the feature. A violation of this subdivision shall be considered a misleading advertisement for the purposes of Section 11713.”

California Senate Bill No. 1398

While California had existing laws that regulated truly autonomous vehicles – vehicles without physical controls or a human monitor. However, the law did not apply to the litany of crash-avoidance technologies like lane-keep assist, adaptive cruise control, automatic emergency braking, blind-spot assistance, and others. These technologies enhance the driving experience and make it safer, but they don’t make a car fully self-driving.

Claims of deceptive marketing have plagued Tesla for several years. Adding to the confusion are the various names automakers use for similar technologies and functions that aren’t always easy to decipher. Cars are more complex than ever, with massive amounts of new features that should be made clear to the buyer before they hit the road with the rest of us. Knowing a technology's limitations is vital to operate it safely.

Some people still believe there is high demand for Tesla vehicles, but that is not true. So much so that Tesla offered 10,000 miles of free Supercharging and a $7,500 discount to those taking delivery of their cars until December 31. Ironically, Tesla is contacting some customers to blame the bad weather for backtracking these commitments to them.
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One of these customers shared the message Tesla sent her. According to the EV maker, her Model Y’s delivery was “delayed due to inclement weather from last week.” That said, it will not make it before her current scheduled delivery appointment. The EV maker told her it would have to reschedule her appointment to the first week of January based on the current estimated time of arrival (ETA).

In the same message, Tesla shoots the bad news: if delivery happens in 2023, this buyer “will not be eligible for the $7,500 adjustment or free super charging (sic) miles.” Apart from the interesting choice of words, it makes it seem like the delay is her fault, which made GJK – we’ll name her like that to protect her privacy – go public to protest against the situation.

She rightfully wants Tesla to honor its promises. Although weather difficulties are also not to blame on the EV maker, it is ultimately responsible for delivering her a Model Y on December 31, as scheduled. The Model Y buyer is considering canceling the purchase, asking for a full refund (including the deposit), and suing Tesla, depending on what the company will do next.

GJK’s post helped reveal three other cases in the same thread. A group member said the weather affected deliveries of 10,000 vehicles. As the Model Y buyer calculated, that means Tesla may save $75 million if all these customers keep their orders. On the other hand, the most likely scenario is that they will cancel them, which should seriously impact Tesla’s Q4 2022 results.

The truth is that Tesla offered these incentives solely to improve them. The surprising element here is that it is willing to frustrate old and new customers by making that very clear. We would not be surprised if it repeated this promotion in March to improve sales numbers in Q1 2023.

Curiously, some people tried to convince her to purchase the EV anyway because “it’s the best car they ever owned,” because they bought it without incentives with no regrets – perhaps a bit of envy for the $7,500 some are getting – or because of other similar remarks. Some tried to argue the message was false or that GJK’s post was just FUD – nothing out of the ordinary with the so-called Tesla community.

Those trying to defend the EV maker with more objective arguments stated that Tesla is doing that to prevent GJK from paying $15,000 less on her Model Y. The EV maker is allegedly offering the rebate to incentivize people to buy now instead of next year, when the $7,500 federal tax credit may be available to some Tesla vehicles if they meet the eligibility criteria.

For GJK, that’s simple: she only bought the car because of the $7,500 discount and the free Supercharging miles. Without it, she’s not interested. All the Model Y buyer asks is that Tesla has the integrity to stick to the deal it made with her. GJK already paid for the car and does not care about receiving it now or in January as long as Tesla does not revoke the advantages it promised to offer just because it could not deliver the EV when it said it would. Fair enough.

With all cases involving drivers sleeping at the wheel of Tesla vehicles, the company decided to make it more difficult to trick Autopilot and Full Self-Driving. It would no longer be possible to place weights on the steering to pretend the driver is paying attention, and the inside camera would also monitor behavior. None of that worked on December 28 in Germany.oos

The Bavarian police reported it had to pull over an unspecified Tesla at around noon (local time). Police officers tried to perform a traffic check, but the driver did not follow the instructions they gave him: they honked and told him to stop. That would start a 15-minute chase at 110 kph (68.4 mph) in which the police noticed the Tesla kept a constant distance from the patrol car. That was the first sign the driver could have activated Navigate on Autopilot.

When they managed to get a closer inspection of the vehicle, they could see the driver seat was reclined and that the driver had his eyes closed. That reinforced their impression that the car was using Tesla’s advanced driver assistance system (ADAS). It took the police 15 minutes to wake the driver and get him to pull over. Luckily, nobody got hurt.

The 45-year-old driver presented signs of “drug-typical abnormalities,” but the Bavarian police did not disclose exactly what these signs were. The vehicle inspection revealed a steering wheel weight in the footwell. As we already mentioned, this device is used to trick Autopilot and pretend that you have your hands on the steering wheel while the system is working. When Autopilot does not sense that input, it deactivates.

Tesla drivers tend to believe that Autopilot turns their vehicles into autonomous cars. There are videos of these guys trying to prove that this is the case with them in the rear seats while Navigate on Autopilot or Full Self-Driving is active. Some even take naps or pretend to do so to prove that. All fatal crashes involving these systems with Tesla are due to overreliance: believing that the features can do more than they actually can. That is a nasty product of autonowashing, which is to consider that anything is more autonomous than it really is.

California will forbid Tesla to name its ADAS Autopilot and Full Self-Driving on January 1, 2023, because that can be deemed a “misleading advertisement.” Tesla is facing several investigations about its software for crashing against emergency vehicles and fatal wrecks. Despite all that, the EV maker still has a video online that states: “The person in the driver’s seat is only there for legal reasons. He is not doing anything. The car is driving itself.” This German driver probably believed that.

Although he is lucky not to have died or killed anyone this time, the Bavarian police started a preliminary investigation into the criminal offense of endangering road traffic. He will have his driver’s license suspended while a German court evaluates his situation.

The Tesla Model Y was Europe's best-selling passenger car overall in November, overtaking the Volkswagen Golf.

After falling out of the top 50 in October, the electric crossover rebounded strongly in November, with 19,144 units sold – a gain of more than 260 percent on the same month last year. The Model Y was also Europe's overall top-seller in September.

Tesla's European sales rose 97 percent in November to 31,820 units, largely because of the 260-percent surge in sales of the Model Y.
The Model Y was the only EV on Europe's November sales podium, with the Dacia Sandero ranking second with a volume of 18,746 (up 16 percent) and the Toyota Yaris coming in third place with 17,309 sales (up 150 percent).

Year-to-date, the Peugeot 208 – which also offers an all-electric variant – is Europe's overall top-seller, with a volume of 193,743, according to Dataforce's preliminary numbers cited by Automotive News Europe. The French subcompact hatchback looks set to finish 2022 as Europe's overall best-seller.

Through November, six different models have finished the month as Europe's top-seller, but only two of them were all-electric – the Tesla Model 3 (March) and Tesla Model Y (September, November).

Interestingly, in Germany – Europe's biggest car market – the Tesla Model Y was dethroned in November by the Tesla Model 3. The sedan overtook the crossover as the most-registered electric vehicle in Germany, according to data from the country's national auto agency, the Kraftfahrt-Bundesamt (KBA).

Tesla sold 6,811 Model 3s in November in Germany, compared to 3,687 Model Ys. Last month also marked the start of deliveries for the refreshed Model S and Model X in Germany, with Tesla selling 106 and 35 units, respectively.

Tesla's deliveries in Germany hit record levels for the month of November, accounting for a 93-percent increase year-over-year for a total of 10,819 vehicles. November 2022 was the automaker's second-best sales month yet in the country behind September.

Earlier this year, Tesla CEO Elon Musk famously predicted that the Model Y would become the world's best-selling vehicle overall in 2023. That certainly looks possible at the moment as the Model Y dominates sales charts in Europe and other regions.

The Inflation Reduction Act (IRA) will enter into effect on January 1, 2023, offering a $7,500 tax credit to buyers of electric vehicles under certain conditions. Days before the deadline, the Internal Revenue Service (IRS) published the list of EVs that qualify for the IRA tax credit. Nevertheless, the list raised more controversies than it solved.
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Biden Administration vowed to make the United States the main production hub for electric vehicles and Li-Ion batteries. The $430 billion IRA offers sizeable incentives to companies to produce electric cars and batteries in North America. It also provides tax credits for consumers who buy electric vehicles produced in North America with components sourced solely from U.S. free trade partners. Although the IRA was meant to combat China’s grip on battery raw materials, the act angered South Korea, Europe, and Japan, among others.

According to IRA, buyers get a $7,500 tax credit when they buy an eligible electric vehicle, provided it is built in North America and the battery materials, and components are not sourced from China or other countries on the U.S. block list. Since the U.S. Treasury has delayed the guidance regarding battery material provenance and component manufacturing, these restrictions do not apply yet. There are caps for cars’ prices and buyers’ income, but the key takeaway is that most people would get a $7,500 tax credit when they buy an eligible EV starting January 1, 2023.

Now, the IRS has also published the list of eligible EVs, which comprises 14 car manufacturers operating in the U.S. Not all have submitted a list of models but have agreed to become a “qualified manufacturer.” General Motors, Kia America, Mercedes-Benz USA, and Mazda Motor of America are among them. Being on this list doesn’t automatically mean that the EVs (or PHEVs) qualify for the tax credit. They still need to have undergone final assembly in North America and have an MSRP not exceeding $80,000 for vans, SUVs, and pickup trucks or $55,000 for other vehicles.

Tesla has submitted the list of eligible models, and we can see that only the Model 3 and Model Y vehicles qualify for the federal subsidy. It’s understandable why the Model S and Model X did not make it, considering that both have an MSRP well above the $80,000 limit. Only Tesla Model 3 RWD and the Long Range variants qualify, although the Model 3 Performance is not available to order for now.

It’s surprising that not all the variants of the Model Y are considered SUVs, thus benefitting from the higher MSRP limit. According to the IRS list, only the seven-seat variants of the Tesla Model Y are in the SUV category, while the five-seat variants are limited at $55,000. This applies to Tesla Model Y AWD, Model Y Long Range and Model Y Performance. Intriguingly, Tesla doesn’t sell a seven-seat variant of the Model Y Performance, although this might change in the future. Also, no five-seat Model Y has an MSRP under $55,000 as of now.

Even more intriguing, a similarly sized crossover, the Volkswagen ID.4, is considered an SUV when it comes with all-wheel drive, despite not having a third seat row. It also falls into the “other vehicles” category when it’s not fitted with an AWD drivetrain. It’s important to note that a tax credit doesn’t equal money in the bag. If you only owe $1,500 in taxes, you will only be able to apply for a $1,500 tax credit. You also need to observe the income caps: $150,000 for single filers, $300,000 for joint tax filers, or $225,000 for heads of households.