January 8, 2019
Tesla Addresses Lost Tax Break by Lowering Prices
Tesla has been going gangbusters. Despite a serious PR hiccup when production lagged on its promised mid-level family sedan, the fully electric automotive pioneer has been doing banner business.
While not a chief driver of the company’s success, the promise of a tax rebate for buying a fully electric car helped make the price tag more attractive for fence-sitting consumers. Unfortunately for late-adopting Tesla buyers, the tax credit had a temporary shelf life. Once the company reached 200,000 units sold, the tax credit would begin a gradual phase-out.
So, when Tesla surpassed that pre-set mark last July, the phase-out of the tax credit began. This put a bit of a burr in the saddle of prospective Tesla buyers. And it also presented a public relations crossroads for Tesla. Would the company absorb the negative hit from losing the tax credit, or could they find a way to turn it into a PR win.
You probably already guessed the answer. Tesla very wisely turned this potential negative into a big PR win for the company through a simple and effective program. Since customers would be losing the tax rebate, Tesla recently announced the company would be cutting is car prices in the United States by $2,000, saving customers cash if they still opted for a Tesla.
There’s a catch, though. The tax rebate was up to $7,500, a much bigger benefit than the $2,000 people are now getting. That rebate is sliced in half, to $3,750 through June, then is cut by half again in July. By January 1, 2020, the rebate will disappear altogether.
So, for now, even though they won’t get all the money previous buyers did, the $2,000 price credit will cover more than half of what buyers in the next few months are losing. From there, consumers should be prepared to pay nearly full price.
In the end, while the Tesla price cut will not cover the full amount consumers are losing by the phasing out of the rebate, the company’s gesture is sure to be appreciated by consumers who thought they were completely out of luck.
The biggest PR benefit for Tesla, is that it’s the company, and not the government, giving consumers this price break. By taking the initiative to transform a negative into a positive, the company has shown consumers it’s committed to their interests. That should bode well for brand loyalty and sales.
The PR lesson here is to make the most of every opportunity. Even if that opportunity starts out looking like a PR challenge, you could turn it into a win.
Ronn Torossian is the CEO and founder of 5WPR.