This afternoon, the shares in Tesla have dropped by over 10 percent as the markets opened. The plunge comes after the manufacturer of electric vehicles said that it would be reducing the prices of its cars by $2,000 (£1,586).
The carmaker was compelled to partially absorb the cost of changes to a green tax credit for electric vehicles in the United States of America, which nearly halved yesterday to $3,750. According to a regulatory filing, as a result, all three of its models will now be priced $2,000 lower.
Previously, the tax credit had been utilised by buyers as a means of paying less for a Tesla car. Elon Musk, the Chief executive of the company, utilised this by repeatedly reminding his followers on Twitter that the scheme would end in its current form on the 1st of January.
After releasing its production numbers for the fourth quarter, Tesla said that it produced a total of 86,555 vehicles, including 61,394 vehicles of its Model 3 sedan which was troubled by various production woes earlier in 2018.
This was an increase from the total of 53,239 Model 3s that was recorded in the third quarter, however, no improvement was made on its target rate of 5,000 cars per week. The numbers came despite the statement of Tesla last October that it would concentrate on improving its production rate in the fourth quarter.
A survey that was conducted by Factset disclosed that the firm also appeared to miss the estimates of analyst on deliveries of the Model 3, hitting 63,150 delivered vehicles as compared to forecasts in Wall Street of 64,900.
The overall deliveries in the fourth quarter were able to reach 90,700 vehicles, more than 8 percent higher as compared to its previous all-time record-high. This had a total of 245,240 vehicles for 2018, which Tesla said was nearly as many vehicles delivered as it had achieved in all the prior years combined.
An equity analyst at Hargreaves Lansdown, Nicholas Hyett, stated: “For most automotive groups these would be very impressive numbers – almost tripling the number of vehicles you deliver in just one year is no mean feat, and Musk and his team deserve a huge amount of credit.”
He added: “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. Deliveries have fallen short of what some analysts had expected and the shares are suffering as a result.”
The analyst added that at its current rate of deliveries, Tesla could lose $700 million in revenue in 2019 from the price cuts.
He concluded: “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.”
The financial results of Tesla for the fourth quarter are anticipated to be announced next month, with consensus estimates as surveyed by S&P Global Intelligence forecasting earnings before tax to amount to $426.7bn.