$US5b wiped from Tesla after sales miss forecasts

$US5b wiped from Tesla after sales miss forecasts

$US5b wiped from Tesla after sales miss forecasts

Tesla also plans to cut the prices of all their vehicles by $2,000 in an attempt to offset a reduction in federal tax credits for drivers who buy electric vehicles, previously buyers received $7,500 in federal tax credits but this figure was recently cut in half. After that it drops to $3,750 for six months, then $1,875 for another six months and then it expires altogether.

Analysts cited by Reuters speculate that Tesla's decision to cut prices is aimed at mitigating the loss of the credit and maintaining the true price tag of the vehicles, including the problematic Model 3.

The company fell just short of its target of delivering 100,000 Model S and Model X vehicles for the quarter.

The Shanghai Gigafactory, based in eastern China, aims to manufacture Model 3 and Model Y cars, with annual capacity of 250,000 vehicles, according to a filing.

Total production hit 86,555 vehicles, 8 per cent ahead of the previous best quarter. In total, Tesla produced 61,394 of its Model 3, 25,161 of its Model S and 14,050 of its Model X. Its deliveries also increased by 8 per cent, the company said.

The announcements spooked investors and sent shares plunging by as much as 10 per cent in early trading.

Wedbush analyst Daniel Ives, meanwhile, said the price cut was "a potential positive" for demand, "but not what the bulls wanted to hear on the impact to profitability and ultimately the bottom line".

The decision to cut prices sent the company's shares value even lower than recent reports of a huge, unliquidated U.S. inventory. This suggests that many existing reservation holders are still waiting for the cheaper $35,000 vehicle that Tesla has promised but doesn't yet build.

"As we continue to focus on quality and efficiency rather than simply pushing for the highest possible volume in the shortest period of time, we expect to have a slightly more gradual ramp through [the first quarter], likely ending the quarter at a weekly rate of about 2,500 Model 3 vehicles", Tesla said Wednesday, per the Wall Street Journal.

But the auto maker is now also grappling with the phasing out of tax credits in the United States which made buying electric vehicles less expensive.

The Palo Alto, California, company's 2018 sales included nearly 146,000 Model 3 lower-priced cars and another 99,000 of the more expensive Model S sedan and Model X SUV.

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