Published: Thu, January 03, 2019
Finance | By Kristine Clayton

Tesla selloff on Model 3 delivery news overdone, analyst says

Tesla selloff on Model 3 delivery news overdone, analyst says

In July, Tesla passed that mark and triggered a phase-out of the tax credit, when, according to CNN, it became the first carmaker in the United States to sell more than 200,000 plug-in vehicles.

But the auto maker is now also grappling with the phasing out of tax credits in the USA which made buying electric vehicles less expensive.

The $2,000 cut in prices, however, weighed on the stock, pushing it down 9.4 percent to $301.69 in morning trade on a broadly weaker day for USA markets.

Starting Wednesday, the company will be reducing its price for Model S, Model X and Model 3 vehicles in the $2,000, it said.

While Tesla reported yet another historic quarter that saw the company delivering an average of 1,000 vehicles per day, Wall Street has not taken kindly to the electric auto maker's Q4 2018 results.

Tesla said it was churning out nearly 1,000 Model 3s daily, broadly in line with Mr Musk's promises but slightly short of Wall Street expectations.

Chief executive Elon Musk is under intense pressure to deliver on his promise of stabilising production for the Model 3, which is seen crucial for easing a cash crunch and achieving long-term profitability.

The company said more than three quarters of Model 3 orders in the last three months of the year were from new customers, rather than reservation holders, suggesting many consumers are still waiting to buy versions of the sedan at the long-promised $35 000 sticker price. However, the company delivered just 63,150 Model 3s in the fourth quarter, missing analyst targets by 1,750 vehicles.

At the same time, Tesla said it would cut the prices of its Model S, Model X and Model 3 by about £1,590 because tax credits for electric vehicles are due to end in the US. "We continue to believe Model 3 demand remains strong, particularly as the company has not begun global shipments or introduced leasing options, and are buyers on any weakness", Kallo wrote. The vehicle has been delivered only to North American customers and in its mid to higher priced configurations. With regions such as Europe and China expected to start receiving the electric sedan in the next few months, Tesla's numbers would likely remain healthy in the year to come.

Like this: