It's been a rough quarter for Tesla. The carmaker announced this week a quarterly loss of $671 million and now, quietly, experts are growing concerned with the direction and future viability of the company.
Last August Tesla began production of its Model 3. The first mass-marketed sedan for the company was touted as a "game changer." At the time, CEO Elon Musk said there should be “zero concern” about Tesla's ability to increase production to 10,000 cars per week at some point in 2018.
That pipe dream is over.
On a conference call this week, Musk said the moving target of making even 5,000 Model 3s per week is not in the cards. He said, “We dropped the ball and did not realize what was dropped until quite recently.” Tesla attributed the slow production to difficulties with producing battery packs at their "Gigafactory."
It should also be noted the company laid off 700 assembly line workers recently.
And now, adding to those concerns, President Trump's new tax plan.
Federal Tax Plan Removes EV Credit
Video Credit: CBS News
The electric vehicle (EV) tax credit is a huge incentive for automakers like Tesla and their customers. The White House's proposed tax plan removes that federal credit.
The (EV) credit is a huge draw for consumers as subsidies pay for a pretty good chunk of the price of the car. Now, consumers will need to decide if they want one at a higher price, should the GOP tax plan passes through Congress.
The EV credit runs from $2,500 to $7,500 per vehicle. In some states like California, and as noted in this story on IVN, Tesla gets a massive subsidy from California taxpayers. It appears the state anticipated the elimination of the federal subsidy, and is poised to foot that bill to taxpayers.
That could already be happening, as the state passed a .12 cent a gallon gas tax. It's likely a portion of those dollars will be used to subsidize Elon Musk and Tesla.
Tesla's Stock Drops
Responding to the news, Tesla stock dropped more than 7% to $297 a share. Still, that valuation dramatically dwarfs Ford $12.42/share and GM $42.78/share.