Tesla cuts prices as 4Q deliveries miss analysts' estimates
- Author: Eleanor Harrison Jan 03, 2019,
Jan 03, 2019, 0:58
Tesla Inc. tumbled in early trading after failing to hit delivery marks for its Model 3 sedans in the fourth quarter and slashing prices to make up for federal tax credit decreases in the United States.
Tesla disappointed investors Wednesday, delivering 90,700 vehicles during the fourth quarter, which fell short of Wall Street forecasts despite its efforts to ramp up production. Once it did so, the company had two more quarters until its full tax credit was cut in half.
But the price cut of $2,000 on the model took the market by surprise and weighed on the stock, pushing it down 9.4% in morning trade on a broadly weaker day for U.S. markets.
The company said in a statement before the markets opened that it delivered over 245,000 electric cars and SUVs last year, almost as many as all previous years combined.
Tesla will be announcing its Q4 financials later this month.
Tesla recognizes that these incentives are major selling points for their vehicles - that's why the company formed the "EV Drive Coalition" with other prominent EV makers in late 2018.
Longer-term we think the price cut is more concerning.
In a client note Wedbush analyst Daniel Ives said the price cut was "a potential positive" for demand, "but not what the bulls wanted to hear on the impact to profitability and ultimately the bottom line".
Tesla delivered 63,150 Model 3s in its fourth quarter, falling short of FactSet estimates of 64,900.
Tesla boosted production during the quarter, churning out 86,555 vehicles, up 8 percent from 80,142 during the third quarter, the company said.