Tesla cuts prices as 4Q deliveries miss analysts' estimates

Posted January 03, 2019

The news also comes as automakers and analysts expect USA new vehicle sales to weaken in 2019. 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". Tesla said fourth-quarter deliveries were 8 percent higher than its previous quarterly peak in the third quarter of 2018. He said the cut in prices was likely weighing on the stock.

With Musk having generally reigned in his own behavior and the company's Model 3 production figures much closer to weekly production targets, the alarm bells that were ringing six months ago have quieted considerably.

In the fourth quarter, Tesla delivered 63,150 Model 3s, 13,500 Model S sedans and 14,050 Model X SUVs.

Rows of new Tesla Model 3 electric vehicles are seen in Richmond, California.

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"The price cut is what's driving the stock lower, as it openly acknowledges the sunset of subsidy dollars is a material headwind", said Craig Irwin, an analyst with Roth Capital Partners. It's not clear if the leftovers were Model 3s from Q3, or if there were a number of Model S or X vehicles allocated to customers.

Tesla boss Musk is under intense pressure to deliver on production promises, with the Model 3 billed as its first mass market vehicle and its path to profitability. Shares were last down 7.8% at $306.97.

The missed expectation is especially noteworthy because the fourth quarter of 2018 was the last period during which customers could earn a major federal tax credit for buying an electric vehicle, which would have boosted sales.

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

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The company delivered 8 percent more vehicles during the quarter, a new all-time high, but the numbers were less than expected.

Musk now plans to turn attention to filling Model 3 orders in Europe and China starting in February, which could help offset some of the potential drop in U.S. demand linked to the shrinking tax credit.

Tesla has been urging buyers to make use of the federal tax credit, with Musk reminding them on Twitter on Saturday that the benefit would drop to half at the beginning of 2019.

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

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