Tesla produced a record 86,555 vehicles in Q4 2018

Ann Santiago
January 3, 2019

But while Tesla boosted the total number of vehicles it manufactured in the quarter by ~8 percent, it came in below Wall Street expectations and does not appear to have quite maintained its target 5,000 vehicles/week production target for the Model 3. Tesla delivered 13,500 Model Ss and 14,050 Model Xs in the fourth quarter, raising the total for the year to 99,394 compared with about 100,000 in 2017. Analysts questioned whether the $2,000 price cut on all models signaled lower demand in the United States, and ultimately whether the move would undermine nascent profitability at the Silicon Valley automaker, which has never posted an annual profit. 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.

The Model 3, Tesla's mass market vehicle, saw sales of more than 145,000 previous year, the company said. Tesla stock (NASDAQ:TSLA) has fallen more than 7% on Thursday's trading, partly due to the company's 63,150 Model 3 deliveries falling slightly short of FactSet estimates of 64,900.

Tesla reported that 75 percent of the 61,394 Model 3s it delivered during the quarter went to new customers rather than reservation holders, which suggests numerous latter are still holding out for the $35,000 auto.

Now, Tesla has taken things a step further, opting to slash the price of its Model 3, Model S, and Model X vehicles by $2,000 across the board.

As of writing, Tesla stock is trading down 7.45% at $308.00 per share.


Tesla has urged buyers to make use of the federal tax credit, with Mr Musk reminding them on Twitter on Saturday that the benefit would drop to half at the beginning of 2019.

Longer-term we think the price cut is more concerning.

In Q4, we produced and delivered at the rate of almost 1,000 vehicles per day, setting new company records for both production and deliveries.

The 63 150 Model 3s Tesla handed over to customers in the fourth quarter trailed the roughly 63 700 average analyst estimate.

"In sum, this was a strong quarter for Tesla, but Model 3 deliveries missed Street expectations, and this will be a cloud over the name until the company reports earnings in late January and gives initial guidance for European Model 3 demand in 2019", said Daniel Ives, an analyst at Wedbush Securities. But customers in those markets still have several weeks to wait, with the company now saying those deliveries will start in February.

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