TSLA Tesla Inc

By Tim Higgins 

Tesla Inc. delivered 112,000 electric vehicles in the final three months of last year, enough to meet Chief Executive Elon Musk's ambitious growth goal for 2019.

All totaled, Tesla delivered 367,500 vehicles in the year against a target of handing over at least 360,000 cars and sport-utility vehicles, the company said Friday.

The full-year figure represents a 50% increase from 2018. It punctuates the dramatic rise in output Tesla has achieved from 2016, when the Silicon Valley auto maker revealed the mass-market Model 3. The car was the centerpiece of Mr. Musk's bet that he could transform the electric-car maker from niche luxury player into a more mainstream car company.

Fourth-quarter deliveries rose 23% from a year earlier and beat analyst expectations for 106,000 vehicles.

Sales of the Model 3 fueled the year's growth. Deliveries of the Model 3 continued upward momentum from the third to the fourth quarter, rising 16% to 92,500 in the final three months. That was a 47% increase from the final quarter of 2018.

Mr. Musk's 2019 target of delivering between 360,000 and 400,000 vehicles represented a step down from loftier ambitions pronounced earlier. Mr. Musk had once promised to make 500,000 in 2018, with Tesla reaching the one million vehicles level in 2020.

Tesla won't disclose for several weeks how much money it made on the cars it delivered in the fourth quarter. Analysts surveyed by FactSet, on average, expect a profit for the most recent quarter, though they project that Tesla will remain in the red for all of 2019.

Vehicle deliveries are set to increase again this year, in part bolstered by the Model Y compact SUV that should start going to customers. Analysts estimate the company will deliver around 463,000 vehicles during the year.

Bringing out the Model 3 in 2017 was harder than Mr. Musk first thought, straining investor patience and threatening the company with financial ruin. The company struggled first with building the car then delivering it to customers.

Tesla in 2019 made 365,194 vehicles, including the Model S large sedan and Model X sport-utility vehicle. During the fourth quarter, Tesla produced 104,891 vehicles, a 9% rise from the third quarter.

The final figures mark a turnaround, of sorts, for Tesla. The auto maker needed its main factory in Fremont, Calif., to reach a quarterly record under Mr. Musk's management to achieve his full-year sales guidance. Tesla struggled at the beginning of the year with lower-than-expected sales that spooked investors and raised questions about whether demand for the company's electric cars had peaked.

The slowdown came as the U.S. tax credit for buyers of Tesla vehicles began to phase out, effectively increasing the price of its vehicles. The credit is now gone. Mr. Musk reacted by cutting costs and lowering the vehicles' prices.

The start of the year was also made more challenging by expanding deliveries of the Model 3 overseas for the first time. Once the kinks were worked out, however, markets such as Norway, the Netherlands and China helped boost global sales.

Tesla, on Friday, didn't break out deliveries by region or country. It will later reveal revenue by its top markets, including the U.S., its No. 1, and No. 2 China. Revenue in the U.S. had declined in the third quarter compared with a year before, demonstrating the growing importance of markets such as China.

Tesla on Friday said it made almost 1,000 salable vehicles at its new factory in Shanghai, which began trial production runs in October. The company said local battery-pack production for its electric cars began in late December.

The auto maker separately announced it was lowering the starting price of its China-made Model 3 to 323,800 yuan ($46,445) from 355,800 yuan. After local subsidies, customers can get the car for 299,050 yuan.

The first 15 China-made cars were handed over to employee customers this week. Tesla broke ground on the Shanghai factory, where it aims to make 3,000 cars a week, almost a year ago.

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

(END) Dow Jones Newswires

January 03, 2020 09:45 ET (14:45 GMT)

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