Tesla Stock Falls Below Key Level On Model 3 Tax Credit Loss; Optimus Robot Updated

Tesla (TSLA) is signaling certain Model 3 trims will lose Inflation Reduction Act (IRA) tax credits in 2024 after previously expecting it simply would be reduced from $7,500 to $3,750. Meanwhile, Tesla also gave an update late Tuesday on its humanoid robot, known as Optimus, releasing a video on X, formerly Twitter, of the generation 2 machine walking, squatting and delicately handling eggs.


Tesla will also perform a software update on more 2 million vehicles after the National Highway Traffic Safety Administration determined the EV giant’s Autopilot system is prone to misuse after reviewing 1,000 accidents. The over-the-air recall, stemming from the NHTSA’s ongoing Autopilot safety probe, affects essentially every Tesla EV sold in the U.S.

TSLA shares sank 3.2% to 229.41 Wednesday during market action, breaking below its 50-day moving average, on the Model 3 and Autopilot news. On Tuesday, TSLA declined 1.1% to 237.01.

Tesla appeared to change language on its website Tuesday evening, telling customers the Model 3 rear-wheel drive and long range trims will not be eligible for any IRA tax credit in 2024. The EV giant cited updated regulatory guidance from the Internal Revenue Service for the change. Those two Model 3 variants use either batteries from China or Korean batteries with Chinese materials.

Tesla received eligibility for the full $7,500 tax credit on all Model 3 trims in early June but never disclosed how it brought the Model 3 into alignment with IRA battery and key component requirements.

Meanwhile, the Tesla Cybertruck all-wheel drive option currently qualifies for the full $7,500 Inflation Reduction Act (IRA) tax credit, according to the Internal Revenue Service (IRS) site. The Cybertruck trim just comes in under the $80,000 IRA cap with a starting price of $79,990.

Tesla Stock: Optimus Video

Chief Executive Elon Musk has recently highlighted that he looks at Tesla as an AI and robotics company. However, it remains to be seen if investors and the market care about Tesla’s Optimus humanoid robot.

The Tesla bot was first “unveiled” on Aug. 19, 2021, during the company’s Artificial Intelligence Day event.

The video released Tuesday claims myriad improvements to the robotics of the humanoid, including fine motor skills. Musk took to X to claim “so much engineering has gone into the hands.”

“In a year, it will be able to thread a needle,” he wrote.

On Sept. 25, the first trading day after Tesla released a video of the Optimus robot, TSLA edged lower early before ending the day up around 1%.

Tesla Stock Performance

TSLA fell below its 50-day line Wednesday. On Tuesday, Tesla stock came off a test of its 50-day line, with shares also closing just above the 21-day line, a key support area for the past several weeks.

The stock is building the right side of a double-bottom base giving it a 278.98 buy point, according to MarketSmith analysis. Aggressive investors could use the Nov. 29 high of 252.75 or a trendline just below 248 as early entries.

Since the beginning of 2023, Tesla stock has surged around 90%, broadly outperforming the broader S&P 500 index.

Tesla stock ranks fifth in the 35-stock IBD automaker industry group. The S&P 500 component has an 81 Composite Rating out of a best-possible 99. Tesla stock also has a 78 Relative Strength Rating and an 88 EPS Rating.

Please follow Kit Norton on X, formerly known as Twitter, @KitNorton for more coverage.


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