Tesla shares tumble after production figures disappoint

Tesla shares tumble after production figures disappoint

Tesla shares tumble after production figures disappoint

Shares of electric auto and solar panel maker Tesla Inc. tumbled Wednesday, Jan. 2, 2019, morning after the company cut vehicle prices by $2,000 and announced fourth-quarter sales figures that fell short of Wall Street estimates. 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". Production also ramped up during the fourth quarter, enabling the company to complete 86,500 vehicles, up 8 percent from the previous quarter. He said the cut in prices was likely weighing on the stock.

The company has been banking on its Model 3 sedan, the performance of which is seen crucial to the carmaker's future.

Its shares fell by about 8% at the start of U.S. trading.

Tesla reported that 75 percent of the 61,394 Model 3s it delivered during the quarter went to new customers rather than reservation holders, which suggests numerous latter are still holding out for the $35,000 vehicle.

Musk previously stated that Model 3 reservations had surged to over half a million, but on a recent conference call he went back on this statement saying: "To be more accurate, there have been 518,000 gross reservations for Model 3 and then we have 455,000 net reservations". Tesla said it delivered 90,700 vehicles from October through December, while analysts polled by data provider FactSet expected 92,000.

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The Shanghai Gigafactory, based in eastern China, aims to manufacture Model 3 and Model Y cars, with annual capacity of 250,000 vehicles, according to a filing. Shares were last down 7.8% at $306.97.

'The price cut is what's driving the stock lower, as it openly acknowledges the sunset of subsidy dollars is a material headwind, ' Craig Irwin, an analyst with Roth Capital Partners.

Tesla said it made the move to soften the impact of falling federal tax credits.

"In sum, this was a strong quarter for Tesla, but Model 3 deliveries missed Street expectations, and this will be a cloud over the name until the company reports earnings in late January and gives initial guidance for European Model 3 demand in 2019", said Daniel Ives, an analyst at Wedbush Securities.

Tesla Inc. (TSLA.O) shares dropped as much as 10 per cent on Wednesday after the company reported fourth-quarter Model 3 deliveries just below estimates and said it would lower the price of its cars, prompting at least one analyst to flag the selloff as "overdone".

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