Tesla Sinks as Price Cuts Signal a Ceiling for Costlier Models

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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.

Tesla Inc. has unexpectedly announced a $2,000 price cut on all of its vehicles, amid a cut to the United States federal tax credit for electric auto buyers and reports of thousands of cars still in the company's USA inventory. On Jan. 1 the federal credit for Tesla buyers dropped from $7,500 to $3,750.

Tesla will try to disguise the price cuts with the disappearing tax credit or discounts for buyers who refer other customers to Tesla, Ramsey said.

It's not clear how the delivery figures will affect Tesla's fourth-quarter and full-year 2018 earnings, which likely will be announced in February.

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.

A further 13,500 Model S vehicles and 14,050 Model Xs were delivered in the quarter.




Tesla says it delivered over 245,000 electric cars and SUVs last year, almost as many as all previous years combined. Tesla also claimed to have boosted their production levels in the fourth quarter significantly, from 80,142 in the third quarter to 86,500 in the fourth. If Tesla had a demand issue, therefore, the company would have cut its prices by more than 3 percent, he wrote in a note.

Tesla stock (NASDAQ:TSLA) has fallen more than 7% on Thursday's trading, partly due to the company's 63,150 Model 3 deliveries falling slightly short of FactSet estimates of 64,900. Wedbush Securities analyst Dan Ives told CNBC that Tesla's failure to meet Wall Street projection was something that his firm had been prepared for: "It was a move that was within the realm of possibility, but it caught investors off guard", he said.

Chief Executive Elon Musk is under intense pressure to deliver on his promise of stabilizing production for the company's mass market sedans, seen crucial to it easing a cash crunch and achieving long-term profitability.

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

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.

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