Shares of Tesla Dropped Over 10% After the Electric Vehicle Maker Did This

12:42 01/07/2019

Electric vehicle king Tesla saw its shares collapse as Wall Street learned that the company's delivery numbers for the fourth quarter failed to meet expectations. The stock fell over 6% after the company reported that it delivered 90,700 vehicles during the quarter, falling behind the expectations. The number was however a record for the company and it was an 8% increase over the number in the third quarter. In the fourth quarter, Tesa reported 63,160 Model 3 deliveries, 13,500 Model S deliveries, and 14,050 Model X deliveries. The company's press release also read: "In 2018, we delivered a total of 245,240 vehicles: 145,846 Model 3 and 99,394 Model S and X. To put our growth into perspective, we delivered almost as many vehicles in 2018 as we did in all prior years combined." "Our Q4 Model 3 deliveries were limited to mid- and higher-priced variants, cash/loan transactions, and North American customers only. More than three quarters of Model 3 orders in Q4 came from new customers, rather than reservation holders." The company said it is "taking steps to partially absorb the reduction of the federal EV tax credit (which, as of January 1st, dropped from $7,500 to $3,750). Starting today, we are reducing the price of Model S, Model X and Model 3 vehicles in the U.S. by $2,000. Customers can apply to receive the $3,750 federal tax credit for new deliveries starting on January 1, 2019, and may also be eligible for several state and local electric vehicle and utility incentives, which range up to $4,000. Combined with the reduced costs of maintenance and of charging a Tesla versus paying for gas at the pump – which can result in up to $100 per month or more in savings – this means our vehicles are even more affordable than similarly priced gasoline vehicles." The press release also noted that "Additionally, 2018 was the first time in decades that an American car – the Model 3 – was the best-selling premium vehicle in the U.S. for the full year, with U.S. sales of Model 3 roughly double those of the runner up." “Tesla shares tend to a have a lot more noise and volatility than most, but we think investors who are willing to take a longer-term view of the story will be rewarded handsomely and continue to believe Tesla is on track to post one of the market’s most robust year-over-year earnings increases in 2019,” remarked CFRA analyst Garrett Nelson. Tesla also revealed that it is slashing prices on all of its models by $2,000. Wedbush Securities analyst Dan Ives told CNBC that the cut in prices was likely weighing on the stock. “It was a move that was within the realm of possibility, but it caught investors off guard,” he explained. Starting in March, the company will be delivering its Model 3 sedans to buyers in China. Tesla is expected on Monday to hold the groundbreaking ceremony for its first non-U.S. factory in Shanghai, according to CEO Elon Musk. “Looking forward to breaking ground on the Tesla Shanghai Gigafactory today!” Musk tweeted.

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