Shares in Tesla declined 7.6 percent on Monday. The drop in value came following price cuts in China and a decision to pay tax credits to customers in the United States who missed deadlines because of production delays. The Composite Index for Nasdaq fell by 2.2 percent.
Tesla CEO, Elon Musk, informed customers the company would not let them miss out on tax credits via Twitter on Saturday. Congress voted to phase out the tax credit for individuals that purchase electric vehicles. The new policy mandates the credit be decreased by 50 percent after each six month period until it is eliminated.
Customers who had already ordered electric vehicles from Tesla but had not yet received them social media to complain about the lack of communication from the company. The customers were worried they would not receive the cars they ordered before the January 1 deadline for tax credit cuts. Tesla agreed to make up the difference for customers who will see their $7500 tax credit cut in half.
According to CNBC‘s report, Tesla also lowered the cost of its model 3 cars in China by more than seven percent. The price change was the third for Tesla in the Chinese market over the last two months. The company explained the cost cuts were part of efforts to absorb a portion of the tariffs Chinese customers must pay to purchase American made products. The company gave the explanation following cuts to their Model X and Model S cars first by 12 percent and then by 26 percent.
Further cost cuts were made to Model X and Model S cars during the first week of December when the finance ministry of China decided to suspend Tariffs charged to Tesla to import cars into China. The suspension of tariffs is scheduled to be in place for the first quarter of 2019.
