(Bloomberg) — Tesla Inc . Despite offering more incentives in its biggest markets, it delivered fewer vehicles than expected last quarter, reinforcing demand concerns that have contributed to the electric carmaker’s worst month and year for stock since its initial public offering in 2010.
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The company delivered 405,278 vehicles to customers in the past three months, below the average estimate of 420,760 compiled by Bloomberg. While Tesla’s total was a record quarter, the company opened two new assembly plants last year and fell short of its goal of expanding deliveries by 50%.
Tesla shares fell 3.7% at 4:20 a.m. New York time on Tuesday, before the start of regular trading.
After CEO Elon Musk predicted an “epic” result this year, Tesla cut vehicle prices and production in China, then offered a $7,500 discount in the US. Concerns about rising interest rates, inflation and other economic interventions — a warning about Musk’s antics on Twitter, which he now owns — sent Tesla shares down 37% in December and 65% last year.
“We believe Tesla is facing a significant demand problem,” Tony Sacconaghi, a Bernstein analyst who equates to a sell rating on the stock, wrote in a report on Monday. “We believe Tesla will either have to lower its growth targets (and run its factories below capacity) or sustain recent price cuts globally and squeeze margins.”
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Tesla increased deliveries last year by 40% to 1.31 million, just shy of the 50% average annual growth rate the company expects to achieve over several years. Production rose 47% to 1.37 million.
The company produced 439,701 vehicles in the fourth quarter, surpassing deliveries by 34,423 units. Tesla said it continued to shift to “a more regional level of vehicle creation,” which led to another increase in cars in transit at the end of the quarter.
“Tesla is selling cars, and the automobile industry is slowing down,” Gene Munster, managing partner at Loop Ventures, said by phone. “They are still struggling with logistics, and the gap between production and deliveries has grown since last quarter.”
During Tesla’s last earnings call, Musk said that Tesla is trying to “smooth out” deliveries each quarter so that the company doesn’t have waves of deliveries that pile up at the end of each period. Head of Design Frans von Holjassen tweeted that he hit the ground running at the Southern California delivery center on New Year’s Day.
The rebates offered by Tesla in the U.S. at the end of the quarter are in line with the maximum tax credit that electric vehicles can receive under the inflation-reduction law signed by President Joe Biden in August. The automaker suffered a setback on the matter late last month when the Internal Revenue Service released a list of electric and plug-in hybrid vehicles eligible for federal tax credits under the law.
The IRS considers only the seven-seat versions of Tesla’s Model Y to be sport utility vehicles, meaning that the five-seat versions would be subject to a price range below the vehicle’s price. Musk questioned this in several tweets, writing on Jan. 1 that “it’s confusing,” and on Monday questioned whether the company was being punished for making the Model Y more efficient.
Tesla doesn’t break out sales by region, but the U.S. and China are its biggest markets, and 95% of sales in 2022 will be the Model 3 sedan and Y crossover.
The company manufactures the Model S, X, 3 and Y at its factory in Fremont, California. Its Shanghai plant produces the Model 3 and Y, and it began delivering Model Ys from its new plants near Austin and Berlin in the first half of last year.
Although Musk delivered Tesla’s first semi trucks to PepsiCo Inc in December, the company did not report any deliveries of the model in its quarterly report. The carmaker separately announced plans for an investor day on March 1, where it will discuss long-term expansion plans, next-generation vehicle platform, capital allocation and other matters.
–With assistance from Craig Trudel.
(The third column updates with stock movements during early trading.)
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