Tesla shares drop on disappointing quarterly performance

Model 3					Tesla adjusts Model 3 prices amid lowered $3,750 federal tax credit

Model 3 Tesla adjusts Model 3 prices amid lowered $3,750 federal tax credit

The electric-car maker's shares fell by 9.3 percent, to 301.87, in early trading.

Tesla Inc. plunged after mildly disappointing Model 3 deliveries and an across-the-lineup price cut prompted concerns that the carmaker may bump up against a ceiling for demand.

Shares of electric auto and solar panel maker Tesla Inc. tumbled Wednesday morning after the company cut vehicle prices by $2,000 and announced fourth-quarter sales figures that fell short of Wall Street estimates. Previously, Tesla buyers had been eligible for a $7,500 federal tax credit on electric vehicle purchases, but as of January 1, the federal government has trimmed that credit to $3,750. On Jan. 1 the federal credit for Tesla buyers dropped from $7,500 to $3,750.

Chief Executive Elon Musk is under intense pressure to deliver on his promise of stabilizing production for the company's mass market sedans, seen crucial to it easing a cash crunch and achieving long-term profitability.

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The company delivered 8 percent more vehicles during the quarter, a new all-time high, but the numbers were less than expected.

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. The company said on Wednesday it had produced 61,394 Model 3s and delivered almost 1,000 vehicles per day in the fourth quarter.

Total deliveries rose from the third quarter to 90,700 cars, but missed forecasts, which had been influenced by analysts' expectations of a surge in buyers looking to cash in on the tax credit before year-end. Production also ramped up during the fourth quarter, enabling the company to complete 86,500 vehicles, up 8 percent from the previous quarter.

Tesla previously gave investors hope that its production rates would improve, saying that the number of labor hours to build the Model 3 fell by more than 30 percent from the second to the third quarter.

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