(Bloomberg) — Tesla Inc delivered fewer cars than expected last quarter despite offering big incentives in its biggest markets, sparking demand concerns that led to the worst month and year for the electric car maker’s shares since its 2010 initial public offering. strengthened.
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The company delivered 405,278 vehicles to customers in the past three months, below the average estimate of 420,760 compiled by Bloomberg. While the total was a quarterly record for Tesla, the company opened two new assembly plants last year and still fell short of its goal of expanding deliveries by 50%.
Tesla shares were down 3.7% at 4:20 a.m. New York time on Tuesday before the start of regular trading.
Tesla cut car prices and production in China, then offered a $7,500 discount in the US after CEO Elon Musk predicted an “epic” end to the year. Concerns about rising interest rates, inflation and other economic headwinds — plus alarm over Musk’s antics on Twitter, which he now owns — sent Tesla shares down 37% in December and 65% last year.
“We believe Tesla faces a significant demand challenge,” Bernstein analyst Tony Sacconaghi, who equated the stock to a sell rating, wrote in a report on Monday. “We believe Tesla must either reduce its growth targets (and run its factories below capacity) or continue and potentially increase recent price cuts globally, putting pressure on margins.”
Read more: Tesla Stock Had Its Worst Year Ever It doesn’t come cheap
Last year, Tesla increased its shipments by 40% to 1.31 million, just shy of the 50% average annual growth rate the company expects to achieve over the next several years. Production increased by 47% to 1.37 mln.
The company produced 439,701 vehicles in the fourth quarter, surpassing deliveries by 34,423 units. Tesla said it continued to transition to a “more even regional mix of vehicles,” which led to another increase in transit vehicles at the end of the quarter.
“Tesla is selling cars and the auto industry is slowing down,” Gene Munster, managing partner at Loup Ventures, said by phone. “They are still struggling with logistics and the gap between production and deliveries has widened since last quarter.”
Musk said during Tesla’s recent earnings call that Tesla is trying to “smooth out” deliveries throughout each quarter so that the company no longer has a concentrated wave of deliveries at the end of each period. Design chief Franz von Holzhausen nevertheless tweeted that he was going to work at a delivery center in southern California on New Year’s Eve.
The discounts Tesla offered at the end of the quarter in the US were in line with the maximum tax credit that electric vehicles can receive under the Inflation Relief Act signed by President Joe Biden in August. The automaker suffered a setback late last month when the Internal Revenue Service released a list of electric and plug-in hybrid vehicles eligible for federal tax credits under the law.
The IRS considered only the seven-seat versions of Tesla’s Model Y to be sport utility vehicles, meaning the five-seat versions would be subject to a price limit below the car’s value. Musk took issue with it in several tweets, writing on Jan. 1 that “it’s a mess,” and on Monday asking if the company was being penalized for making the Model Y too mass-efficient.
Tesla doesn’t break out sales by region, but the U.S. and China are its biggest markets, and the Model 3 sedan and Y crossover accounted for 95% of sales in 2022.
The company manufactures the Model S, X, 3 and Y at its factory in Fremont, California. Its Shanghai plant produces the Model 3 and Y, and in the first half of last year it began supplying the Model Y from its newest plants in Austin and near Berlin.
While Musk delivered Tesla’s first Semi trucks to PepsiCo Inc in December, the company did not report any deliveries of the model in its quarterly statement. The automaker also announced that an investor day is scheduled for March 1, where long-term expansion plans, next-generation vehicle platform, capital allocation and other topics will be discussed.
–With assistance from Craig Trudell.
(Updates with stock movement during early trading in the third paragraph.)
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