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Jul 17, 2019

Tesla’s surprise US$6,410 price cut sparks a rant from one devotee

Rain drops surround a Tesla Inc. logo on a Model 3 vehicle ahead of an event at the site of the company's manufacturing facility in Shanghai, China, on Monday, Jan. 7, 2019. After four years of planning, Tesla finally broke ground on its planned $5 billion factory in the world's biggest auto market.

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Laurence Blau, 78, woke up Tuesday morning to a frustrating figure: US$6,410.

That’s the dollar amount that Tesla Inc. had lopped off the list price of a fully loaded performance edition of the Model 3 sedan the night before. Blau, who paid US$68,400 for the car less than three weeks earlier, called it a “bitter pill to swallow.”

“It shakes my faith,” the three-time Tesla owner said in a phone interview.

Blau, a corporate real estate broker in Paramus, New Jersey, is, of course, just one customer. And he isn’t necessarily even swearing off buying Teslas. But his grievance underscores a broader dissatisfaction among the Elon Musk faithful with the dizzying string of changes -- both hikes and cuts -- to the prices of Teslas. They’ve come one after another in recent months, a reflection of the internal confusion within the company over how to navigate through shrinking U.S. incentives, aging model lines and pressure to boost deliveries without compromising profit.

Soon after Tesla cleaved the cost of the Model 3 late Monday, an owner on one of the company’s online forums started a thread with a tongue-in-cheek initial post: “Let the whining begin!”

Musk has fielded many complaints personally -- and publicly -- on Twitter. Much like Tesla has wavered with its pricing, he’s oscillated from adamant, to apologetic, to apathetic, to argumentative. And for the chief executive officer of a company that’s sought to revolutionize car-buying, he’s offered up a perhaps unlikely excuse: Hey, other automakers are doing this, too.

Conventional carmakers and their dealers indeed make frequent tweaks to rebates and incentive offers. But it’s rare for manufacturers to switch up suggested retail prices between model years.

And Musk’s claim that Tesla has been “transparent and consistent” runs counter to some of the company’s closest followers. The usually pro-Tesla blog Electrek wrote late Monday that Tesla’s “chaotic” pricing strategy had become “kind of a running joke.”

Tesla kicked off the year with an across-the-lineup price cut to partially offset the U.S. tax credit for its cars halving to US$3,750. Representatives for the company didn’t respond to questions about the latest price change for the Model 3, which one analyst said was linked to the federal incentive dropping again to US$1,875 as of July 1.

The price swings may also reflect Musk’s struggle to manage through the Model 3 seeming to cannibalize demand from the older and pricier Model S and X. While analysts fear this could be crimping profit margins, Tesla’s move to stop offering a cheaper, standard-range version of the vehicles could counter any such trend.

For Blau, even when factoring in the smaller tax credit, he would have saved about US$4,500 had he waited to buy a loaded Model 3 now instead of late last month.

When he visited his hometown showroom Tuesday morning to demand a refund, a store representative offered him a free wall charger. Blau declined.

“I got very upset,” he said. “My complaints fell on deaf ears.”