Tesla’s Deliveries Rise 70 Percent Following Dubious Discounting Scheme

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Chris White Tech Reporter
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Tesla Motors’ steep third quarter discounts for Model S vehicles have apparently resulted in a 70 percent rise in the company’s deliveries.

The California-based electric automaker said Sunday that it delivered nearly 24,500 cars in the quarter, including 15,800 of Tesla’s Model S and 8,700 of the Model X, a sports utility vehicle. The increase in deliveries, of course, comes after Tesla offered an “aggressive” secretive discount program as a ploy to drive delivery numbers.

The ploy was used to dramatically reduce the luxury vehicle’s pricey cost, which usually retails at around $100,000. The delivery count, because of the reduction in cost of inventoried vehicles, rose 37 percent from the previous quarter.

Brad Erickson, an analyst with Pacific Crest Securities, said on Sept. 29 that he “detected aggressive Model S discounting at U.S. sales centers to maximize third-quarter deliveries.”

Erickson criticized Tesla for offering steep discounts on Model S vehicles sitting in inventory, not those custom built for special orders. The move was meant to boost the company’s delivery count, and, according to Tesla’s statement Sunday, the ploy appears to have worked.

The company promised to ratchet up production in the fourth quarter, despite Tesla’s storied history of missing projected delivery marks. It maintained its guidance of delivering 50,000 cars in the second half.

Tesla’s delivery count in July was 15 percent less than forecasted and was even lower than the first quarter of this year. The company, which was founded by tech-entrepreneur Elon Musk, manufactures cars after they are purchased.

It sold 14,370 cars that month, down from the 17,000 it expected to sell, according to a letter sent to shareholders in July. Worse still, the company managed to deliver only 14,820 vehicles, not the 16,000 vehicles it promised in the first quarter.

Musk, for his part, moved to discontinue the “aggressive” discounting practice, telling employees in an email that discounts should be given to customers wishing to buy inventoried vehicles, or those badly damaged.

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