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Tesla Stock Drops as Company Slashes Vehicle Prices

03 January, 2019, 03:01 | Author: Melinda Barton
  • Model 3					Tesla adjusts Model 3 prices amid lowered $3,750 federal tax credit

His efforts may have contributed to Tesla's 90,700 sales tally for the fourth quarter of 2018, which was the company's best result yet, but fell below Wall Street estimates.

The news also comes as automakers and analysts expect U.S. new vehicle sales to weaken in 2019.

Electric vehicle manufacturer Tesla produced a total of 86,555 vehicles in Q4 2018. Despite the increase, shareholders felt a certain unsteadiness as stock prices declined and investors expressed their disappointment over failed expectations to close out the year. The company wouldn't say how many vehicles it had in inventory at the end of the year, but it reported enough to supply 20 days of sales at the end of September.

The electric-car maker's shares fell by 9.3 percent, to 301.87, in early trading.

Tesla reported that 75 percent of the 61,394 Model 3s it delivered during the quarter went to new customers rather than reservation holders, which suggests numerous latter are still holding out for the $35,000 vehicle. With regions such as Europe and China expected to start receiving the electric sedan in the next few months, Tesla's numbers would likely remain healthy in the year to come.

The new pricing structure means that the cheapest version of the Model 3 is now $44,000 ($45,200 including mandatory destination and documentation fees).


Deliveries of Model 3s in the period were 63,150, a 15pc rise and in line with Tesla's guidance but slightly below the 63,700 analysts had been expecting.

As of writing, Tesla stock is trading down 7.45% at $308.00 per share. "We also believe the $2,000 price cut to help subsidize the lower EV tax credit is a move that was not fully expected".

Tesla shares fell after the electric auto maker delivered fewer-than-expected Model 3 sedans in the fourth quarter and cut prices for all its vehicles in the US.

Longer-term we think the price cut is more concerning.

The company said it delivered 63,150 Model 3s in the quarter, falling short of FactSet estimates of 64,900. Wedbush Securities analyst Dan Ives told CNBC that Tesla's failure to meet Wall Street projection was something that his firm had been prepared for: "It was a move that was within the realm of possibility, but it caught investors off guard", he said.

The company says it produced almost 87,000 vehicles in the fourth quarter, also 8 per cent above its previous quarterly record set in the third quarter.

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