Shares in Tesla have slumped after the electric auto maker cut U.S. prices for all its vehicles to offset lower green tax credits and fell short on deliveries of its mass-market Model 3 sedans in the fourth quarter.
"Longer term we think the price cut is more concerning - it suggests Tesla customers are perhaps a bit more price sensitive than you might have thought", Hargreaves Lansdown analyst Nicholas Hyett write in a client note. Worldwide deliveries to Europe and China will start next month and it will launch a right-hand drive version later in the year.
Tesla delivered 63,150 Model 3s in the quarter, falling short of FactSet estimates of 64,900. 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's 2018 production fell far short of a goal set almost three years ago of manufacturing 500,000 vehicles for the year.
Tesla's Q4 production numbers are comprised of 61,394 Model 3 vehicles, in line with the company's guidance and 15% more than its already notable figures in the third quarter. But some bearish investors are likely interpreting it as a move to stimulate demand, said Wedbush analyst Dan Ives. Tesla delivered 13,500 Model Ss and 14,050 Model Xs in the fourth quarter, raising the total for the year to 99,394 compared with about 100,000 in 2017.
In the third quarter of 2018, Tesla delivered on CEO Elon Musk's promise to make a net profit after years of losses. Analysts pegged Tesla to sell more than 96,000 vehicles as the fourth quarter ends.
Tesla has been unable to put a tough 2018 in the rear-view mirror as its shares fell after the electric carmaker missed industry forecasts for deliveries of its budget Model 3 vehicle and announced price cuts to offset lower tax incentives. Expansion of Model 3 sales to other markets, including with a right-hand drive variant, will occur later in 2019.
Tesla Inc has started taking orders for its Model 3 sedan in China for a deposit of 8,000 yuan ($1,153.60), according to the electric carmaker's China website.
"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.