In a news release, Tesla said it would cut the price of its Model 3, Model X and Model S vehicles beginning Wednesday to partially cover the reduction of the federal tax credit for electric vehicles. The full $7,500 tax credit for Tesla customers was cut in half to $3,750 at the start of the new year. 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.”
Tesla said it produced and delivered a record number of vehicles. The company’s production grew to 86,555 vehicles, up 8 percent from the high set in the past quarter. In total, Tesla produced 61,394 of its Model 3, 25,161 of its Model S and 14,050 of its Model X. Its deliveries also increased by 8 percent, the company said.
FactSet, which compiled an average estimate from nine analysts, projected that Tesla would deliver 2,000 more vehicles than it did, including 1,750 more Model 3 vehicles.
“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. Ives added that Tesla shares are “hypersensitive to any issue around Model 3” and that it will remain a stock that is “guilty until proven innocent” until it discloses quarterly earnings figures next year.
Ross Gerber, the president and chief executive of Gerber Kawasaki, said Tesla’s latest figures prove its production line is consistent with high quality, but that the stock is down because of the price cut, which was unexpected. “The mission is to get electric vehicles on the road at the lowest price point without sacrificing margins,” he said, adding that he sees “unlimited demand” for the more affordably priced $35,000 Model 3, even without the government rebate.
The Model 3, Tesla’s mass market car, saw sales of more than 145,000 last year, the company said. The vehicle has been delivered only to North American customers and in its mid- to higher-priced configurations. Deliveries to customers in Europe and China will begin in February, the company said. “There remain significant opportunities to continue to grow Model 3 sales by expanding to international markets, introducing lower-priced variants and offering leasing,” Tesla said.
Tesla delivered 99,394 of its Model S and X vehicles in 2018, just shy of its 100,000 goal.