With the rising importance given to climate changes, countries are becoming more aware of the steps they must take to reduce the negative effects. One of the most significant changes that can help reduce pollution all over the world is the use of electric cars. Electric cars might bring about a positive change in the atmosphere as they don’t let out carbon nor do they consume combustible gases. This makes it a win-win situation from both the sides. Considering this, many companies decided to go easy on the taxes for such cars in order to promote their use. When a country decided to discontinue such tax benefits, it adversely affected the Tesla sales.
While other countries are busy promoting the use of electric cars through monetary perks, the Hong Kong government has decided against it. According to an announcement on the 1st of April this year, this government discontinued tax breaks that were given to Tesla for its electric cars. It seems that the tax break might have really served its purpose as it’s in absence, the Tesla sales have drastically gone down. This incident is a clear example of how effective government incentive programs can be. An announcement about the reduction in sales was made on Monday.
Decline in Tesla sales
Wall Street Journal analyzed the official data from the Transportation Department of Hong Kong. After this analysis, it was observed that less Tesla models were sold in the second quarter of the year. Based on numbers, there was no sale of a single Tesla S model sedan or Model X sport-utility vehicle in April. Even in the month of May, there was a sale of only five electric cars. Such numbers are almost as good as a zero.
The collapse in Tesla sales comes as a tremendous shock for the automaker. Just before the annulment of the tax break, there was registration of 3,700 electric cars in the first quarter. Within two months of such impressive progress, the numbers of registration have gone tumbling down. Due to the success in the first quarter, its global sales crossed 25,000 in the first quarter itself. This would make this period the best sales quarter ever. But the reduction in the second quarter resulted in the company’s loss of this position. This incident might force Tesla to change its sale strategy as the company was planning to target mainland China next. Tesla decided to carry out long-term analysis before it invests or sets up a plant in any region.