Tesla Had a Record Quarter, so Why Did its Shares Just Nosedive?

Tesla Had a Record Quarter, so Why Did its Shares Just Nosedive?

His efforts may have contributed to Tesla's 90,700 sales tally for the fourth quarter of 2018, which was the company's best result yet, but fell below Wall Street estimates.

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.

Analysts cited by Reuters speculate that Tesla's decision to cut prices is aimed at mitigating the loss of the credit and maintaining the true price tag of the vehicles, including the problematic Model 3. Global deliveries in Europe and China will start in February 2019. In comparison, Wall Street projected 64,900 for the Model 3, 14,200 for the Model S and 13,600 for the Model X, based on average figures from previous quarters compiled by FactSet.

The $44,000 Model 3 is seen as the most important auto for Tesla, with founder Elon Musk touting it as a more affordable vehicle aimed at bringing electric motoring to the masses.

The company says it produced almost 87,000 vehicles in the fourth quarter, also eight per cent above its previous quarterly record set in the third quarter. This suggests that many existing reservation holders are still waiting for the cheaper $35,000 vehicle that Tesla has promised but doesn't yet build.

CNBC reports that Elon Musk's Tesla has yet again run into another stumbling block, once again failing to meet its expected fourth quarter delivery estimates.

The decision to cut prices sent the company's shares value even lower than recent reports of a huge, unliquidated USA inventory.

The price cut of $2,000 beginning on Wednesday on the Model 3 - as well as on its higher-priced Model S and Model X - took the market by surprise and weighed on the stock, pushing it down 6.8 percent to close at $310.12, after falling as much as 10 percent during the session.

China is the largest market for electric vehicles and most forecasters predict that its sales in the country will speed up rapidly as government regulation drives toward a goal of 100-percent electric vehicles by 2030.

Tesla's 2018 deliveries included nearly 146,000 Model 3 lower-priced cars and another 99,000 of the Model S sedan and Model X SUV, both of which can easily top $100,000. This move is in response to the fact that Tesla customers can no longer claim the full $7,500 federal tax credit on a new EV purchase as of January 1, 2019.

Related Articles