Tesla shares go into reverse on missed deliveries and price cuts

03 January, 2019, 08:24 | Author: Gerard Cortez
  • Model 3					Tesla adjusts Model 3 prices amid lowered $3,750 federal tax credit

Actual Model 3 production averaged ~4,700 vehicles per week.

At the same time, the company also announced a $2,000 price cut for all its vehicles to help offset a tax credit previously available to Tesla buyers in the USA, which has recently been reduced from $7,500 to $3,750. Tesla announced today that it is now dropping the price of that particular Model 3 by $2,000, bringing it to $44,000. Model S and X production fell slightly year-on-year, but this was in-line with expectations and likely the result of the company's intense focus on pushing Model 3 development. It said it was churning out nearly 1,000 Model 3s daily, broadly in line with Musk's promises but slightly short of Wall Street expectations. Worldwide deliveries to Europe and China will start next month and it will launch a right-hand drive version later in the year.

Tesla's vehicle deliveries fell short of Wall Street analysts' expectations as the Silicon Valley automaker wrestles with the realization that its federal tax credits are quickly running out. Once a company reaches this milestone, this tax credit reduces by half every six months, and later is phased out entirely.

In late December, The Associated Press spotted dozens of Teslas stored in a lot on Chicago's north side, and Mark Spiegel, a hedge fund manager who bets against Tesla's stock price, reported hundreds of vehicles stored at other locations across the U.S.

But some said fears of eroded demand were overblown. Up until now, Tesla buyers have qualified for a $7,500 rebate, good until Tesla sold its 200,000th vehicle. The company said the remaining tax credits combined with not having to fuel up at the gas pump and lowered maintenance costs "means our vehicles are even more affordable than similarly priced gasoline vehicles".

Ahead of the price cut announcement, chief executive Elon Musk urged Tesla customers to make use of federal tax credits. GM declined to comment.

Wedbush Securities analyst Dan Ives told CNBC the delivery numbers were expected, but the price cuts surprised Wall Street.

Tesla delivered 63,150 Model 3s in its fourth quarter, falling short of FactSet estimates of 64,900.

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Tesla said it produced and delivered a record number of vehicles.

Bank of America reportedly expected the company to deliver 71,500 Model 3s.

Total deliveries rose from the third quarter to 90,700 cars, but missed forecasts, which had been influenced by analysts' expectations of a surge in buyers looking to cash in on the tax credit before year-end. Musk has promised to post sustained quarterly profits. For the first nine months of 2018, the company suffered a third-quarter loss per vehicle delivered of $8,019.

Production in Q4 grew to 86,555 vehicles, 8% more than our prior all-time high in Q3.

That said, the company built 53,239 Model 3s last quarter, so it's still improving on its base output.

"Tesla disappointed the market".

'The deliveries are below our estimates and the consensus estimates.

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