Tesla cuts U.S. prices on all vehicles, shares drop

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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".

But that was little improvement on its previous rate of 5,000 Model 3s per week.

The company announced a $2 000 price cut on each of its vehicles to help make up for USA buyers now being eligible for only a $3 750 federal tax credit for the next six months, half what they were getting previously.

Nicholas Hyett, an analyst at Hargreaves Lansdown, said: 'For most automotive groups these would be very impressive numbers.

'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. It suggests customers are perhaps a bit more price-sensitive than you might have thought'. The analyst said demand for Tesla vehicles, most notably the Model 3, remained strong leaving 2018 and entering 2019.

Moving beyond the success of Q4, we are taking steps to partially absorb the reduction of the federal EV tax credit (which, as of January 1, dropped from $7,500 to $3,750).

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Since Tuesday the relief has been halved and will be halved every six months until it disappears. That's vastly better than where the company was a year ago, but significantly below the 6,000/week target Musk previously said Tesla would achieve by August 2018. The company's production grew to 86,555 vehicles, up 8 per cent from the high set in the past quarter.

Tesla delivered 63,150 Model 3s in the quarter, falling short of FactSet estimates of 64,900. Wedbush Securities analyst Dan Ives told CNBC that Tesla's failure to meet Wall Street projection was something that his firm had been prepared for: "It was a move that was within the realm of possibility, but it caught investors off guard", he said.

The company's sales included nearly 146,000 Model 3 lower-priced cars and another 99,000 examples of the more expensive Model S and Model X. The Model 3 starts at US$35,000 but still can't be purchased for under US$45,000.

The numbers are low, but company executives believe they are still in line with forecasts.

Reuters calculated that Tesla's third-quarter pretax profit was around $3,200 per vehicle delivered. He said the cut in prices was likely weighing on the stock.