Tesla Just Offered a New Deal on Its Model Y
is offering another classic incentive to move metal. It’s an attractive, below-market, financing rate available for new Model Y electric vehicle purchases.
Tesla is offering 0.99% annual percentage rate on qualifying new Model Y purchases, according to its website. That deal wasn’t available a week ago. Then, the quoted rate was 6.49% APR. The Model 3 rate is still 6.49%.
With $4,250 down on a base model, Tesla’s example down payment, the lower rate saves a buyer about $100 a month.
The deal is good for potential Tesla buyers. It’s mixed for Tesla. Lower financing rates can drive volume, but Tesla is footing the bill for a lower, below-market rate. It’s another price cut amid slowing demand growth for electric vehicles.
Typically, when an auto maker offers an unusually low rate, it’s accounted as a price cut for the manufacturing part of the business. The financing arm of the auto company doesn’t lose money on the low-price loan. The financing company has to borrow money at market rates and earn a spread on its loan book.
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Incentives are nothing new. Tesla has cut prices and offered incentives since late 2022 to help boost volumes as competition increased and the high-end of the EV market became saturated.
Price cuts worked well in 2023. Tesla delivered some 1.8 million vehicles, up from 1.3 million in 2022. Price cuts haven’t had the same impact in 2024. Tesla delivered about 387,0000 units in the first quarter, down almost 9% from the same time a year ago.
Tesla isn’t the only one struggling to grow volumes. Americans bought 268,909 battery-electric vehicles in the first quarter, according to data provider Cox Automotive, up about 3% from a year earlier. Growth in the fourth quarter was closer to 40%.
The Model Y sold 96,729 units in the first quarter, up 1% from a year earlier. Growth was slow, but the Y still accounted for 35% of all EV sales. The Y is Tesla’s best-selling vehicle. It was the second best-selling non-truck in the U.S. in 2023, trailing only the
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RAV4. (The three best-selling vehicles in the U.S. are all pickup trucks.)
Coming into Monday trading, Tesla stock is down about 32% so far this year, trailing the
by about 41 percentage points.
Falling earnings estimates, a function of lower volumes and pricing, have weighed on shares. Wall Street expects Tesla to earn about $2.40 a share. At the start of 2024, the estimate was closer to $3.81 a share.
Write to Al Root at allen.root@dowjones.com
