Tesla sinks after Model 3 price cut, disappointing deliveries

Model 3					Tesla adjusts Model 3 prices amid lowered $3,750 federal tax credit

Model 3 Tesla adjusts Model 3 prices amid lowered $3,750 federal tax credit

The price cut, which will apply to Model S, Model X and Model 3 cars, is in response to a reduction in green tax credits. The slide was not helped by an overall fall in the United States stock markets. For the Model 3, that amounts to an average rate of 4,722 vehicles per week over the quarter-a fair amount below the 5,000/week rate that Tesla CEO Elon Musk said would be required to make the auto profitable in 2018.

Tesla fell just short of its target to deliver 100,000 of its more expensive Model S and Model X vehicles for the year, selling 99,394 units. Tesla had previously stoked investor optimism by claiming that improvements in efficiency had reduced the number of labor hours needed to build the Model 3 by 30 percent.

Tesla boosted production during the quarter, churning out 86,555 vehicles, up 8 percent from 80,142 during the third quarter, the company said.

After several production and delivery snafus Tesla finally reached a self-imposed deadline to produce 5,000 Model 3s a week at the end of June. Tesla is countering that, however, with a $2,000 USA price reduction for both the Model S and Model X. Since customers can still receive a federal tax credit of $3,750 on Tesla vehicles for the next six months, it helps soften what's effectively a price hike.

Ahead of the price cut announcement, chief executive Elon Musk urged Tesla customers to make use of federal tax credits.

The company said in its third quarter results that it would focus in the fourth quarter on further increasing its production rate and there were indications that Wall Street had been expecting higher numbers.

"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", said CFRA analyst Garrett Nelson. The company tracks 22 analysts that forecast an average of 91,046 deliveries during the quarter, according to data compiled by Tesla.

Musk made an all-out push to boost sales of the Model 3 a year ago as the end of the tax break approached.

Recommended News

We are pleased to provide this opportunity to share information, experiences and observations about what's in the news.
Some of the comments may be reprinted elsewhere in the site or in the newspaper.
Thank you for taking the time to offer your thoughts.