Tesla Slashes US Prices on Vehicles as Demand, Share Price Falter

Tesla Sinks as Price Cuts Signal a Ceiling for Costlier ModelsMore

Before January 1, Tesla buyers were entitled to a tax credit of $7,500. 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.

Shares of Tesla fell by more than 6 per cent during the first trading day of 2019 after the electric-car company released its delivery figures for the end of 2018, which modestly fell short of Wall Street expectations compiled by FactSet. This number is comprised of 63,150 Model 3 (signifying a 13% growth over Q3), 13,500 Model S, and 14,050 Model X vehicles. 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. Tesla announced today that it is now dropping the price of that particular Model 3 by $2,000, bringing it to $44,000.

Elon Musk's auto company delivered a total of 90,700 vehicles in the fourth quarter, up from 29,870 a year earlier.

Gary Gastelu is FoxNews.com's Automotive Editor.

"This was a good quarter in terms of production ramp and strong underlying demand, but Tesla came up shy of bull expectations and this will be the focus of the street", Daniel Ives, an analyst at Wedbush Securities, said in an email to Bloomberg.

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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The company said it would begin delivering Model 3s to Europe and China in February, in order to compensate for troubles at home.

For the full year, Tesla said it produced 254,530 vehicles, which is 9,290 more than it delivered. Tesla's own internal tracking shows its deliveries were in line with or above estimates, spokesman Dave Arnold told reporters.

The company has been banking on its Model 3 sedan, the performance of which is seen crucial to the carmaker's future.

As of January 1, a $US7500 tax credit on Teslas bought in the USA was halved, a move that is widely expected to slow the company's sales.

To soften the blow of their cars' high price tags, Tesla has always offered federal EV tax credits to United States residents; usually amounting to around $7500 in total savings.

The automaker's third-quarter pre-tax profit was around $3,200 per vehicle delivered, but for the first nine months of 2018 the company suffered a third-quarter loss per vehicle delivered of $8,019.

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