In 2010 the US government introduced a federal tax credit for the public regarding EVs. The tax credit benefited people buying electric vehicles where they could take advantage of a premium. The premium was between $2,500 – $7,500 depending on the battery pack in the car. After the first 200,000 EVs sold, the tax credit would enter a so-called ”phase-out” period which would mean that the incentive for EVs would decline. Tesla started phasing out earlier last year in January. At this time, the credit was cut in half and went from $7,500 to $3,750. Since then, the credit was slowly declining during 2019 and in December it came to an end. This means that during 2020 there will be no more tax incentives for Tesla vehicles. Just one month before the end of the tax credit, Elon Musk unveiled the Cybertruck. The pickup truck brought a lot of attention to Tesla and this might just be the “Cybertruck effect” they were looking for.
So how has Tesla dealt with this?
Since the end of the phase-out period, no Tesla customers have had access to tax incentives from the US government. When losing the incentive, many predicted that the demand for Tesla vehicles would decline. Last year, Tesla announced and urged customers to buy a Tesla vehicle by sending out emails. In the emails, they advised consumers to take advantage of the federal tax credit while they still had the chance.
”In less than 5 weeks, the federal tax credit will be expiring and purchases of a new Model S, Model X or Model 3 will no longer be eligible for this incentive. Order online in less than three minutes and experience the ease, convenience and safety of an all-electric design.
Place your order and take delivery by December 31, 2019 to be eligible for the federal tax credit. Orders placed near the end of the year are not guaranteed to be delivered by December 31.”
The email urging customers to buy a Tesla boosted sales in the final quarter of 2019. The increase in sales just at the end of last year brought speculations that the deliveries in the first quarter of 2020 would slow down. This was just speculations though and the people at Tesla are claiming otherwise. The demand and delivery goal for Tesla is supposedly going to be the same for Q1 of 2020 as the last quarter of 2019.
So how can this be?
The ”Cybertruck Effect”
Last November, at the design studio in Hawthorne, Elon Musk introduced the world to the Cybertruck. The new vehicle in Tesla’s product range shocked the world and made a big fuzz in the news and on the internet. The design of the car and the specifications makes this car so unique. The car is basically a pickup truck with the performance of a sports car. The top-performing model will do 0-60 MPH (~0-100 km/h) in less than 2.9 seconds and has an impressive range of over 500 miles (~805 km).
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Rumours are saying that over 550,000 Tesla Cybertrucks have been preordered. Tesla is also saying that people with reservations are choosing to lease a Model 3 meanwhile waiting for their Cybertruck. This is one reason why the demand is expected to be high even in the first quarter of 2020.
The top-performing model is said to go into production earlier than expected. The three-motor Cybertruck (top-preforming) will cost $69,900 and production is will begin in 2021. The production for the single-motor, rear-wheel-drive Cybertruck will begin in late 2022 and will have a price of only $39,900.
The Cybertruck was a brilliant move by Tesla and is one of the reasons why they will be able to keep demand high even during Q1 of 2020. Pickup trucks have been the best selling cars for a long time in the US and the Cybertruck does, therefore, make complete sense. The event was also a great success due to the amount of attention that the ”show” attracted. It put the eyes on Tesla and opened up a lot of people to the EV market.