Tesla shares drop after US price cut, production numbers

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Tesla disappointed investors Wednesday after announcing that it delivered 90,700 vehicles during the fourth quarter, more than 2,000 vehicles short of what Wall Street analysts expected.

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

The company said more than three quarters of Model 3 orders in the last three months of the year were from new customers, rather than reservation holders, suggesting many consumers are still waiting to buy versions of the sedan at the long-promised $35 000 sticker price. Tesla delivered 13,500 Model Ss and 14,050 Model Xs in the fourth quarter, raising the total for the year to 99,394 compared with about 100,000 in 2017.

The company has been banking on its Model 3 sedan, the performance of which is seen crucial to the carmaker's future.

Tesla says it delivered over 245,000 electric cars and SUVs last year, almost as many as all previous years combined.

"There remain significant opportunities to continue to grow Model 3 sales by expanding to global markets, introducing lower-priced variants and offering leasing", Tesla said in a press release.

While fourth quarter Model 3 deliveries of 63,150 topped the 56,065 Tesla made in the third quarter, it fell just short of the 63,700 analysts expected, Bloomberg reported.

Ives added that Tesla shares are "hypersensitive to any issue around Model 3" and that it will remain a stock that is "guilty until proven innocent" until it discloses quarterly earnings figures next year.

The full US$7500 (NZ$11,270) tax credit for Tesla customers was cut in half to US$3750 at the start of the new year.

As of writing, Tesla stock is trading down 7.45% at $308.00 per share. The move will partly offset the expiration of a $7,500 federal tax credit for electric vehicle purchases that will be phased out this year. The company's production grew to 86,555 vehicles, up 8 per cent from the high set in the past quarter.

The company now is moving into an important phase of its business and will have to decide whether to cut production to match what appears to be waning demand, or discount its vehicles to stimulate sales like other automakers do, Gartner analyst Michael Ramsey said.

The 63 150 Model 3s Tesla handed over to customers in the fourth quarter trailed the roughly 63 700 average analyst estimate.

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