TSLA Tesla Inc

By Tim Higgins 

Tesla Inc. said it would reduce prices for its vehicles in the U.S. after it reported global deliveries during the final three months of the year more than tripled from the same period a year ago.

Tesla said Wednesday it would reduce prices for the Model S, Model X and Model 3 vehicles in the U.S. by $2,000. The company said the move, in part, was to help make up for a reduction the federal tax credit available for electric-vehicle purchases.

Fueled by the increased production and sales of the new Model 3 sedan, the Palo Alto, Calif.-electric car maker delivered a total of 90,700 vehicles in the fourth quarter, up from 29,870 a year earlier.

The company's full-year total deliveries reached 245,240. In 2017, the auto maker sold 102,807 vehicles after struggling to increase production of the Model 3.

However, shares of Tesla fell 7% in premarket trading after the company missed analysts' expectations on Model 3 deliveries and internal targets on full-year deliveries of Model S sedans and Model X sport-utility vehicles.

Chief Executive Elon Musk had promised to increase sales and production of the Model 3 in the fourth quarter from the third quarter. He spent the final weeks of the quarter urging buyers to take advantage of the $7,500 federal tax credit that phases out for the company this year.

Deliveries of the Model 3 in the fourth quarter rose to 63,150 from 1,550 in the period last year. Analysts surveyed by FactSet had expected Model 3 deliveries to rise to 64,900.

The car, which starts at $46,000, is Mr. Musk's bet that Tesla can make a more affordable vehicle as part of his vision for broader adoption of electric vehicles in the auto industry. Producing the Model 3, however, proved harder than he expected and Tesla missed several self-imposed deadlines to ramp up production to the rate of 5,000 a week.

Tesla finally reached the 5,000-a-week goal during the final seven days of June, then spent the third quarter trying to keep Model 3 production at a steady pace.

During the fourth quarter, Tesla built a total of 61,394 Model 3 sedans, or on average 4,723 a week during the period's 13 weeks.

After learning to build the Model 3, the company has struggled to put customers behind the wheels of those vehicles because of logistics issues. Deliveries rose to 63,150 during the period compared with the third quarter when Tesla delivered 55,840 Model 3s.

The company said it had 1,010 Model 3s in transit to customers. Tesla had previously said it had 8,048 Model 3s in transit to customers at the end of the third quarter that would count as deliveries in the fourth quarter.

Tesla said production of the compact sedan rose 15% during 2018's final three months from the third quarter.

The company also slightly missed its goal of delivering a combined total of 100,000 Model S and Model X vehicles during the year. Tesla delivered 13,500 Model Ss and 14,050 Model Xs in the fourth quarter, raising the total for the year to 99,394 compared with about 100,000 in 2017.

--Kimberly Chin contributed to this article.

Write to Tim Higgins at Tim.Higgins@WSJ.com

(END) Dow Jones Newswires

January 02, 2019 09:48 ET (14:48 GMT)

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