Tesla produced a report variety of vehicles within the remaining quarter of 2018, the corporate reported on Wednesday. Tesla produced 61,394 Model 3s, a 15 p.c achieve from the earlier quarter. Production of the Model S and Model X totaled 25,161 models—barely under final quarter’s determine of 26,903.
This represented a brand new general manufacturing report, however Wall Street wasn’t impressed. As I write this, Tesla’s shares are down about eight p.c for the day to $305.
Tesla produced about 4,700 Model Three autos per week within the fourth quarter. Notably, that is nonetheless under the 5,000-car weekly manufacturing fee Tesla achieved—nonetheless briefly—within the remaining week of June. It’s additionally properly under targets beforehand articulated by CEO Elon Musk.
In May 2017, Musk set a aim of manufacturing 5,000 Model 3s per week by the tip of 2017. The firm missed that quantity, nevertheless it did obtain a revised goal to provide that variety of Model 3s by the tip of Q2 2018. At the time, Musk predicted that output would rise to six,000 Model Three vehicles per week by August 2018.
Instead, Tesla appears to have backslid, struggling to truly produce 5,000 Model 3s per week on a sustained foundation within the fourth quarter.
For the total 12 months, Tesla produced 145,846 Model 3s—vastly greater than the corporate produced final 12 months. Production of Model S and X clocked in at 99,394—barely under final 12 months’s determine of 101,312 and in keeping with expectations.
Tesla is slicing costs to offset the expiring federal tax credit score
Tesla delivered 90,700 vehicles within the remaining quarter of 2018. Deliveries really exceeded manufacturing, an indication that Tesla was speeding to ship as many vehicles as doable earlier than the tip of the 12 months. An enormous purpose for that: a key federal tax break was scheduled to run out initially of the 12 months.
Under federal regulation, prospects who purchase an electrical automobile with a giant battery just like the Model 3, Model S, or Model X are eligible for a $7,500 federal tax credit score. But the credit score is restricted to the primary 200,000 autos offered by a selected producer.
Once that threshold is reached, the credit score phases out over a one-year interval. That course of started initially of the 12 months, with the credit score falling from $7,500 to $3,750. It will fall once more to $1,875 on July first earlier than disappearing altogether on the finish of the 12 months.
Tuesday’s $3,750 discount within the credit score’s worth quantities to a $3,750 hike within the value of Tesla’s vehicles. So Tesla says it is slicing costs $2,000 throughout the board to partially offset this value hike.
One massive query for Tesla is whether or not it may well proceed ramping up manufacturing of the Model 3. The different key query is whether or not the corporate can entice tens of hundreds of patrons in the course of the coming 12 months.
Tesla says that greater than three-quarters of Model Three orders within the remaining quarter of 2018 got here from new prospects fairly than present reservation holders. That means that there continues to be sturdy demand for the Model 3. Moreover, Tesla has nonetheless not provided the $35,000 model of the Model 3 Elon Musk promised when the automobile was unveiled. Presumably, there are a whole lot of prospects on the market who wish to personal a Tesla automobile however cannot afford the excessive value tags on Tesla’s present lineup.
On high of that, Tesla’s Model Three deliveries have been restricted to North American prospects. Tesla is planning to broaden gross sales to Europe and China subsequent month and can broaden to different components of the world later within the 12 months. So even when Model Three demand flagged within the United States, Tesla might be able to preserve its factories busy constructing vehicles for worldwide prospects for a lot of months to come back.