Tesla's (NASDAQ: TSLA) stock fell by a hefty 7.6% last Monday after price cuts ensued in China to compensate for dissatisfied consumers that were inconvenienced due to Tesla's slow production. The delays caused customers to miss important tax credit deadlines that would result in losing out on up to $7500 in tax credit.
The Model 3 starting price has now dropped to $72,000 as a result.
In response to complaints on Twitter, Musk said: Musk tweeted, "If Tesla committed delivery & customer made good faith efforts to receive before year end, Tesla will cover the tax credit difference."
This is not the first time Tesla has had to adjust prices due to production delays. In fact, the same phenomenon has occurred twice in China in the past two months. Tesla said it was "absorbing a significant part of the tariff to help make cars more affordable for customers in China," after it cut prices by 12 to 26% for the Model X and Model S cars respectively that month. The reason it did this was because China temporarily suspended a 25% tariff on American vehicles.
Tesla is no stranger to production and project delays, owing to Musk's tendency to set the bar extremely high for deadline targets and expectations.
Recently, as a result of frustration with LA traffic, Musk launched the Boring Company to revolutionize tunnel digging and traffic logistics. However, a recent product launch that was supposed to happen on December 10 was shifted to December 18, testament to Tesla's inability to effectively schedule its demonstrations in tune with performance capacity.
Reacting to outcry regarding the delay, Musk said: "Boring Company product launch Dec.18. More than a tunnel opening, Will include modded but fully road legal autonomous transport cars & ground to tunnel car elevators."
It is unclear whether Tesla's production inefficiencies are the result of Musks' often questionable leadership or operational issues. However, Tesla was finally able to deliver on Model 3 orders in the latter half of 2018, delivering a total of 83,500 vehicles, including 55,840 Model 3 units. Still, Tesla stock was down 2% on Monday after a report indicated that 3,000 of these vehicles were still in inventory. Tesla had initially promised to go through the entire inventory before the end of the year, but wasn't able to do so.
What remains to be seen is if Musk is able to recognize when to set the bar high and when to keep expectations low, in order to avoid production errors and fiscal losses as a result.