Tesla’s Lower Than Expected Model 3 Deliveries, Price Cuts Cause Shares To Fall

Tesla saw its shares fall by over 9 percent after announcing its Model 3 deliveries for the fourth quarter and price cuts for the entire range in the U.S. as an offset to the tax credit reduction.

The Palo Alto-based EV maker delivered 63,150 Model 3s in the fourth quarter of 2018, falling short of the projected 64,900-unit estimate by FactSet, thus disappointing Wall Street, as reported by Reuters.

Elon Musk is under intense pressure to deliver on his promise for a more stable production output, with Tesla announcing that it was building almost 1,000 cars per day.

Tesla’s $2,000 price cut, however, led share prices drop by 9.4 percent on Wednesday, as Wall Street took it as a sign of weakness now that the federal tax credit is reduced.

“The price cut is what’s driving the stock lower, as it openly acknowledges the sunset of subsidy dollars is a material headwind,” Craig Irwin, an analyst with Roth Capital Partners, said.

As Tesla has already sold 200,000 vehicles, the government will reduce the tax credit by 50 percent every six months until it’s finally phased out. The car maker has urged customers to make use of the subsidy, with even Musk reminding them on his Twitter that the benefit would drop to half at the beginning of 2019.

Tesla’s overall 2018 deliveries rose to 90,700 cars, but missed the forecasts, which were partially influenced by the expectation of a surge in buyers looking to take advantage on the tax credit before the year ended. Tesla’s production was increased by 8 percent in the fourth quarter to 86,555 vehicles, with 61,394 of them being Model 3s.

“Tesla disappointed the market. The deliveries are below our estimates and the consensus estimates. I don’t expect that Tesla operates in the black in 2019,” Frank Schwope, an analyst with NORD/LB said.

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  • 💖 Elon_Will_Save_Us 💖

    Tesla may have disappointed the market, but my beautiful hero Elon Musk will never disappoint me.

  • BlackPegasus

    Aside from the stock tumble and delivery failures, the Model 3 is Tesla’s moment of truth. Lets see how it will hold up when the “unbiased” long term reviews start rolling in.

    • Jason Miller

      There’s reviews all over about bad panel fitment and paint defects…

      On the flip side pretty much everyone is in agreement that the car is a blast to drive.

  • Jason Miller

    So they delivered 99% of the number some random company came up with and it’s the end of the world apparently.

    • PhilMcGraw

      You must not have read the full article and instead commented while reading only half of it or else you would’ve seen:

      “The price cut is what’s driving the stock lower, as it openly acknowledges the sunset of subsidy dollars is a material headwind,” Craig Irwin, an analyst with Roth Capital Partners, said.

      It’s not that they didn’t deliver the expected amount, it’s the fact that they’re lowering prices of their vehicles which makes investors shaky as to whether there is *really* a demand for electric vehicles at a higher price or if they have to be subsidized in some way in order to create more demand. That’s the problem.

  • Six_Tymes

    Be honest, how many people here saw this coming? I did. I mean so much hype, then production problems, it was obvious at that point.

    • Six_Tymes

      they better release a brand new S and X for 2020, or at least a new S. if they don’t that’s going to be very bad for them

  • Arthur Burnside

    The failiure to produce is not the cause of the drop – Tesla has always failed in this regard. The loss of half the tax credit is part of it, but the BIG reason is what’s been happening to Tesla sales lately WRT competitors actually becoming available and whipping Tesla’s ass – for example the Jaguar I Pace, winner of a zillion awards, and recommended over Tesla by everyone except Elon Musk. It has not only outsold both the Tesla Model S and Model X by two to one in Holland, but has caused Tesla sales to drop an astonishing 40% in Norway. Perhap even scarier for the folks at Tesla is the performance of a car that won’t even be available until late 2019 – the Porsche Taycan, a direct Model S competitor. It has a long waiting list and Porsche doubled its planned production a few weeks ago due to intense demand – they will likely build more Taycans than Tesla builds Model S cars in its first year. And the other day they announced that the first year’s production has been sold out. They also mentioned that a large portion of buyers were/had been Tesla owners. The car can fast charge twice as fast using the worldwide charging standard used by virtually every automaker (except Tesla and Nissan) . It has a superior driving range and acceleration to every Tesla excepting their ultra expensive Performance models. Now comes a Chinese ES6 that Tesla simply cannot compete against – about half as expensive, more attractive, greater driving range,etc These are only the first of more than 250 electric cars that will ht non-Tesla showrooms over the next several years. Tesla will have it worst in the U.S. being down $7500 even before pricing the cars.

    • Thetruthísntalwayspopular

      Yup. Once the big OEM’s come online with their EV’s Tesla is fucked. If Jaguar of all companies is whipping them now, how will it be when consumers have choice from Audi, Mec,BMW and Porsche. Not to mention impending American and Japanese EV’s.

      • Mike Sinyaboot ©

        Agreed. This is why I have always found Teslas obscene stock price and valuation absolutely ridiculous. For example, in August of 2017, Tesla was valued at $53.5 billion which was around $3 billion more than GM with Ford being even further back. At the time of that valuation, Tesla had hilariously sold just 22k vehicles that quarter. That was just over 1% of Fords quarterly sales of 1.7 million and under 1% of GMs sales of 2.3 million. It is pure lunacy.

        I have always felt that Tesla needed to form partnerships with the big boys rather than trying to compete with them. They could have supplied every part of their electric powertrains while still building their own cars. In the hypercar world, this is what Rimac does. While they are producing a new hypercar of their own, they supply multiple companies with drivetrains, batteries, and various other electric tech. Koenigsegg has a partnership with Rimac for the Regera.

        Audi, BMW, and Mercedes have been taking their time developing their electric tech and Tesla is going to be in a ton of trouble in the next couple years. All three have also been developing their autonomous systems and they are just as good if not better than Teslas autopilot. Once vehicles like the Taycan are out, there is nothing Tesla offers that makes their vehicles unique other than cheap interiors, huge panel gaps, and dated exteriors.

      • stockinbug

        …Once the big OEM’s come online with their EV’s Tesla is fucked…

        But this has already happened. GM’s “Tesla killer” Bolt has barely 5% of Tesla Model 3’s sales. Jaguar iPace (despite Arthur’s deceptive comment above) is not even doing as well as Bolt is.

        So the competition, so far, is falling flat. How will future competition be any better?

        To me, it’s like career tap dancers declaring they can easily beat that ballet dancer, because of all their “dancing experience.”

    • Kate E

      But they have nowhere near the strength of the Reality Distortion Field as Tesla. As a result it’s like how Mac is better than Windows.

    • So Tesla is finally selling and producing hundreds of thousands of cars in a year, and it’s time to bury the company? Tesla is still years ahead of the competition in battery production, battery technology (just watch how the range of the much larger Tesla Model X with same size battery as the “superior” Jag I Pace (which is a great car!) is better even though the latter is not only smaller but much lighter too), charging infrastructure, wireless updates. Plus they still have the quickest cars by far. Let alone the cool factor, which we all know how important is for marketing.
      One thing for sure though, watch out for NIO (ES6 / ES8), they are seriously good.

    • lagunas3ca

      You mention the waiting list for competitors in every single one of your comments (a lot), but you do realize there is a wait time for both the long-range and dual-motor version of the Model 3, and at least 12 month wait time for the standard-battery Model 3, which includes hundreds of thousands of people still, right?

    • stockinbug

      The iPace is no threat to Tesla. Trying to make it look successful by laser-focusing on one week of sales in one small country is pathetic. iPace’s best month was about 1,000 sales – respectable, but nowhere near any Tesla model.

      As for Taycan, you are pretending a car which doesn’t even exist yet is beating Tesla. Hype is no substitute for reality. It can’t charge “twice as fast as Tesla” because it doesn’t exist yet, and it’s charging network will take years to build.

      Tesla is ALSO rolling out faster charging, and guess what? Tesla can upgrade its ALREADY EXISTING charging network lots faster than one that hasn’t been built yet.

      If competition were a threat to Tesla, we’d already be seeing Tesla hurting from GM Bolt, Jaguar iPace etc. But none of these are anywhere close to Tesla’s sales.

      • Mr. EP9

        I Pace is no threat despite offering similar range and being cheaper than the Model X? Yeah, ok, whatever you say.

        • stockinbug

          I say iPace is no threat because it simply isn’t. It’s not selling as well as any Tesla model.

          This is an unsustainable car for Jaguar. It it did happen to start selling in great numbres, Jaguar would be in trouble. iPace needs a 95kwh battery to get barely 200 freeway miles of range. Model X gets more freeway miles than this on a much smaller 75kwh battery. Heck, Model 3 gets over 300 freeway miles on just an 80kwh battery.

          This isn’t just a matter of poor efficiency. It costs Jaguar real money. They have to buy 30% more battery than Tesla just to get an acceptable range. That’s expensive, darned expensive. Enough to wipe out any profit Jaguar might hope to make on this car.

          • Mr. EP9

            Tesla has been in production longer than the Jaguar that’s why. They’ve had more time to make the Model X compared to the I Pace, get the infrastructure built and develop battery technology; which they seem to do a better job at than building cars. If it starts outselling remains to be seen, but I’m not going to write it off just yet.

          • stockinbug

            …Tesla has been in production longer than the Jaguar that’s why. They’ve had more time to make the Model X compared to the I Pace…

            So you’re saying EV experience matters? Thank you. Many people seem to think Jaguar’s conventional auto experience matters more than Tesla’s EV experience.

            If Jaguar wants to stick with it, perhaps they will eventually come up with an EV that is a real competitor to Tesla, and has the potential to be profitable.

            It doesn’t help that an iPace caught fire sitting in someone’s driveway. Tesla seems to have learned from their experience with this kind of problem – there have been ZERO Model 3 fires to date, despite having produced about 150,000 of them so far.

    • lagunas3ca

      Tesla delivered 8,623 vehicles in Norway in 2018 – up by 161 units from the previous year. So wherever you are getting your facts is bogus and you lose all credibility.

    • lagunas3ca

      Tesla Model 3 and Audi e-tron electric SUV are leading pre-orders in Norway. Followed by Porsche Taycan, Kia Niro Electric, Mercedes-Benz EQC, and then the Jaguar I-PACE.

      Tesla Model 3: 10,000
      Audi e-tron quattro: 6,300
      Kia Niro Electric: 5,900
      Jaguar I-PACE: 3,000

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