Tesla Had a Record Quarter, so Why Did its Shares Just Nosedive?

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Shares in Tesla have slumped after the electric auto maker cut U.S. prices for all its vehicles to offset lower green tax credits and fell short on deliveries of its mass-market Model 3 sedans in the fourth quarter. In the days leading up to New Year's Eve, CEO Elon Musk took to Twitter in an effort to encourage potential customers to pull the trigger before the deadline, but didn't mention the pending price reduction.

The catalyst for the plunge was the release of fourth-quarter production and delivery results, which demonstrated improvements from July's "manufacturing hell" but were nevertheless short of Wall Street analyst targets.

Tesla still hasn't shared if it's any closer to its goal of building a low-priced Model 3. The price for this rear-wheel-drive drive model was briefly cut to $45,000 in October, but it was increased by $1,000 just days later. That goal was announced in May of 2016 based on advance orders for the Model 3.

Tesla's cars are some of the most popular electric vehicles out there, but there's no denying that they are also pretty expensive.

Gary Gastelu is FoxNews.com's Automotive Editor. 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.

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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.

Musk has been under intense pressure to deliver on his promise of stabilizing production for the Model 3, which is deemed crucial for easing a cash crunch and achieving long-term profitability.

The missed expectation is especially noteworthy because the fourth quarter of 2018 was the last period during which customers could earn a major federal tax credit for buying an electric vehicle, which would have boosted sales. The more than 90,000 deliveries that Tesla was able to accomplish in Q4 translates to about 1,000 vehicles per day - a notable feat for such a young carmaker. Production also ramped up during the fourth quarter, enabling the company to complete 86,500 vehicles, up 8 percent from the previous quarter.

Deliveries to customers in Europe and China will begin in February, the company said.

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