By Dhirendra Tripathi
Investing.com – Tesla (NASDAQ:TSLA) shares were down in premarket trading Thursday, after a report saying that its most popular model in the U.K., Model 3, will no longer be covered by the country’s subsidy program.
The Times reported that grants for electric cars will be cut by £500 and abolished altogether for more expensive models. At the same time, the upper limit of cars eligible for the scheme will be reduced from 50,000 pounds ($70,000) to £35,000 ($49,000). The tweak reflects a government desire to avoid subsidizing wealthier households as it looks to contain the cost of supporting the economy through the pandemic.
The change means that Tesla’s popular Model 3, prices for which start at 40,500 pounds, will no longer be covered by the grant. It has consistently been the country’s best-selling electric car over the past year.
The news comes in a week when two of Europe's biggest legacy carmakers, Volkswagen (DE:VOWG_p) and BMW, have ramped up their targets for electric vehicle sales, threatening to eat into Tesla's first-mover advantage. Volkswagen (OTC:VWAPY) said on Tuesday it expects to make 1 million electric vehicles this year, which would put it comfortably ahead of Tesla in volume sales. BMW meanwhile said it wants half of its group sales to be electric by 2030.
It also coincides with reports of a fresh incident involving Tesla's Autopilot software, which apparently failed to prevent a Model Y from hitting a police car in Michigan on Wednesday.
The announcement of Tesla’s $1.5 billion investment in Bitcoin (BitfinexUSD) brought the stock down from its January perch by a third in the first two months of the year but has since recovered about a quarter of those losses.