Tesla shares skid on below-forecast Q4 delivery figures

Shares in electric car maker Tesla fell heavily on Wednesday after revealing disappointing fourth quarter delivery figures and announcing a price cut.

Tesla said it had delivered 90,700 vehicles in the final quarter, an 8% rise over a record third quarter but short of estimates. Analysts polled by FactSet were forecasting deliveries of 92,000 vehicles.

The shares fell almost 10% at one stage as the firm said it was cutting prices on all cars by $2,000 to mitigate a 50% reduction in federal tax credits aimed at luring buyers into the electric market.

Customers can apply to receive the $3,750 federal tax credit for new deliveries starting on January 1, 2019, and “may also be eligible for several state and local electric vehicle and utility incentives, which range up to $4,000”, Tesla said.

Deliveries of Tesla's Model 3 sedan, its cheapest vehicle, came in at 63,150 for the quarter, below the 64,900 analysts had been expecting.

“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 in a statement.

“International deliveries in Europe and China will start in February 2019. Expansion of Model 3 sales to other markets, including with a right-hand drive variant, will occur later in 2019.”

The company fell slightly short of a pledge to deliver 100,000 Model S and Model X vehicles during the year. Tesla delivered 13,500 Model S and 14,050 Model X in the fourth quarter for a 2018 of 99,394.

Hargreaves Lansdown equity analyst Nicholas Hyett said that the shares were suffering from Tesla's stellar performance in almost trebling vehicle delivery in a year and expressed concerns over the price cut.

“But unfortunately for Tesla shareholders, the market has come to expect Herculean achievements, and sometimes that means the bar is just that little bit too high,” he said.

“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.”

“You can see why Tesla have made the decision – having got the production lines flying the company needs to ensure there’s demand for its cutting edge technology when they make it off the conveyor belt.

Hyett said at current delivery rates, the price cut would mean $700m in lost revenue in 2019.

“Not all those sales are in the US of course, but it’s far from ideal for a company which has only just made it into cash positive territory,” he added.