Tesla Shares Nose-Dive Despite Record-Breaking Q4 Production Numbers

Jermaine Castillo
January 3, 2019

Tesla said it was churning out nearly 1,000 Model 3s daily, broadly in line with Mr Musk's promises but slightly short of Wall Street expectations.

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.

"Longer term we think the price cut is more concerning - it suggests Tesla customers are perhaps a bit more price sensitive than you might have thought", Hargreaves Lansdown analyst Nicholas Hyett write in a client note.

Wedbush analyst Daniel Ives, meanwhile, said the price cut was "a potential positive" for demand, "but not what the bulls wanted to hear on the impact to profitability and ultimately the bottom line". Volkswagen has developed a mobile juice pack for electric cars.

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Tesla's shares plunged on the first day of 2019 trading after the company unexpectedly announced it was cutting prices by $2,000.

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 99,394 of its Model S and X vehicles in 2018, just shy of its 100,000 goal. The lot in Chicago has fewer cars on it today, the company said. I don't expect that Tesla operates in the black in 2019, ' Frank Schwope, an analyst with NORD/LB said. If demand fades, then well-documented financial problems such as high debt "start to become very, very serious", Ramsey said.

"The mission is to get electric vehicles on the road at the lowest price point without sacrificing margins", he said, adding that he sees "unlimited demand" for the more affordably priced $35,000 Model 3, even without the government rebate.

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The Shanghai Gigafactory, based in eastern China, aims to manufacture Model 3 and Model Y cars, with annual capacity of 250,000 vehicles, according to a filing.

As of the end of September, the company reported $9.7 billion in long-term debt and another $3.6 billion in accounts payable owed to parts suppliers and other companies.

Moody's Investor Service downgraded the company's debt into junk territory last March, warning that Tesla won't have cash to cover $3.7 billion for normal operations, capital expenses and debt that comes due early this year.

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