Tesla shares drop on disappointing quarterly performance

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On Jan. 1, the federal credit in the US for Tesla buyers dropped from $7,500 to $3,750.

The company also fell just short of its promise to deliver 100,000 Model S and Model X vehicles during the year.

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 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. The Model 3 might be the most affordable option, but its $35,000 still puts it slightly out of reach for the masses.

Shares in Tesla have slumped after the electric auto maker cut United States prices for all its vehicles to offset lower green tax credits and fell short on deliveries of its mass-market Model 3 sedans in the fourth quarter.

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 USA markets. Tesla said fourth-quarter deliveries were eight per cent higher than its previous high in the third quarter of 2018.

"This was a good quarter in terms of production ramp and strong underlying demand, but Tesla came up shy of bull expectations and this will be the focus of the street", Daniel Ives, an analyst at Wedbush Securities, said in an email.

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

Mr Hyett estimated that if Tesla continues to deliver cars at the same rate, the price cut will mean $700 million in lost revenue in 2019.

At current delivery rates, Tesla's reductions would cost it more than £550million in 2019, he said.

There remain significant opportunities to continue to grow Model 3 sales by expanding to worldwide markets, introducing lower-priced variants and offering leasing. Tesla announced today that it is now dropping the price of that particular Model 3 by $2,000, bringing it to $44,000. Our inventory levels remain the smallest in the automotive industry, and we were able to reduce vehicles in transit to customers by significantly improving our logistics system in North America. Overall, Tesla produced 145,846 Model 3s in 2018, along with 99,394 Model S and Model X vehicles.

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