SALT LAKE CITY — Following a year the company is calling its best ever — in spite of coming up short on production estimates — Tesla greeted 2019 by announcing a $2,000 price reduction on selected models of its all-electric vehicles.
But investors saw the discounting as a negative move, particularly in light of missed manufacturing goals, and sent Tesla stock tumbling nearly 10 percent over the first two trading days of the New Year.
Tesla's price adjustments on its Model 3, Model S and Model X vehicles represent a very small slice of the base prices of these models, which came in before the reduction at $46,000, $78,000 and $84,000, respectively. The company said the adjustment was an effort "to partially absorb the reduction of the federal (electric vehicle) tax credit" which, as of Jan. 1, dropped from $7,500 to $3,750 for those who purchase new Tesla vehicles. While some states offer additional incentives for electric vehicle purchases, Utah suspended its own program in 2016 and, as of Jan. 1, began assessing a user fee for drivers of electric vehicles in a move legislators say is aimed at recouping lost gas tax revenues.
Tesla said it delivered 245,240 vehicles in 2018, a figure that nearly exceeds the total number of vehicles the company has delivered in its entire six years of production. Still, the number of Model 3 and Model S sedans and Model X SUVs produced by the company in the final quarter of last year fell short of expectations, and Tesla stock ended the trading day on Thursday at $300.36 per share, down almost 10 percent for 2019.
Tesla CEO Elon Musk has long professed the goal of bringing pricing of the Model 3, which first rolled off the company's robot-heavy assembly lines in 2017, down to $35,000. But production of the four-door sedan has long been beset by delays, and backlogged reservations number in the hundreds of thousands. Since January of 2018, the Model 3 has outsold all other plug-in electric cars in the U.S. and the company reported it delivered over 145,000 of the vehicles, its best-selling model, in 2018.
While Musk has found himself in hot water at various times over the past year, including with the U.S. Securities and Exchange Commission last summer after he tweeted comments that alluded to taking the company private, and with investors for reportedly smoking marijuana during a live recording of an interview with actor/comedian Joe Rogan in September, Tesla earned record profits in the third quarter of 2018. And, the company has been trouncing well-established high-ticket brands like Mercedes-Benz and BMW for vehicle sales in the small and midsize luxury car category.5 comments on this story
Tesla has also surpassed the two remaining behemoths of U.S. automobile manufacturing in market value. As of the end of trading on Thursday, Tesla had a market capitalization of just over $51.5 billion, versus about $45.5 billion for General Motors and around $30 billion for the Ford Motor Co.
Tesla said its 2018 business achievements "likely represent the biggest single-year growth in the history of the automotive industry" and that it reclaimed a distinction that has eluded domestic vehicle makers for years.
"2018 was the first time in decades that an American car — the Model 3 — was the best-selling premium vehicle in the U.S. for the full year, with U.S. sales of Model 3 roughly double those of the runner up," the company wrote in a statement.