(Bloomberg) — Tesla Inc. delivered fewer vehicles than expected in its most recent quarter despite offering strong stimulus in its largest markets, adding to demand concerns that contributed to the electric-carmaker’s worst month and year for shares since its 2010 IPO.
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The company handed over 405,278 vehicles to customers in the last three months, down from the median estimate of 420,760 compiled by Bloomberg. While the total was a quarterly record for Tesla, the company opened two new assembly plants last year and fell short of its goal of increasing deliveries by 50%.
Tesla shares fell 3.7% Tuesday as of 4:20 a.m. New York time before the start of regular trading.
After Chief Executive Officer Elon Musk predicted an “epic” end to the year, Tesla cut vehicle prices and manufacturing in China, then offered $7,500 in rebates in the US. Concerns about rising interest rates, inflation, and other economic headwinds — plus alarm over Musk’s antics on the Twitter he now owns — sent Tesla shares down 37% in December and 65% over the past year.
“We believe Tesla faces a significant demand problem,” Toni Sacconaghi, a Bernstein analyst with a sell rating on the stock, wrote in a report Monday. “We believe that Tesla must either scale back its growth targets (and run its factories below capacity) or maintain and potentially increase recent price cuts globally, putting pressure on margins.”
Read more: Tesla stock had its worst year ever. That doesn’t make it cheap
Tesla grew deliveries 40% last year to 1.31 million, below the 50% compound annual growth rate the company says it aims to achieve over several years. Production rose 47% to 1.37 million.
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The company produced 439,701 vehicles in the fourth quarter, exceeding deliveries by 34,423 units. Tesla said it continued the transition to “a more even regional mix of vehicle builds,” which led to a further increase in cars in transit at the end of the quarter.
“Tesla is selling cars and the auto industry is slowing down,” Gene Munster, managing partner of Loup Ventures, said by phone. “They’re still struggling with logistics, and the gap between production and shipments has widened since last quarter.”
Musk said during Tesla’s most recent conference call that Tesla tries to “smooth out” deliveries each quarter so the company no longer has a wave of handovers focused on the end of each period. Design boss Franz von Holzhausen tweeted that he was helping out at a Southern California delivery center on New Year’s Eve.
The rebates Tesla offered in the U.S. toward the end of the quarter represented the maximum tax credit EVs are eligible for under the Inflation Reduction Act that President Joe Biden signed into law in August. The automaker suffered a setback in this regard late last month when the Internal Revenue Service released a list of electric and plug-in hybrid vehicles that are eligible for federal tax credits under the law.
The IRS only considered seven-seat versions of Tesla’s Model Y as sport utility vehicles, meaning five-seat versions are subject to a price limit below the vehicle’s cost. Musk took issue with this in several tweets, writing on Jan. 1, “That’s a mess,” and on Monday questioning whether the company would be penalized for making the Model Y too mass-efficient.
Tesla doesn’t break out sales by region, but the U.S. and China are its largest markets, and 95% of sales in 2022 were the Model 3 sedan and Y-crossover.
The company manufactures the Model S, X, 3 and Y at its factory in Fremont, California. The Shanghai plant produces the Model 3 and Y and began shipping Model Ys from its newest plants in Austin and near Berlin in the first half of last year.
While Musk delivered the first Tesla semis to PepsiCo Inc. in December, the company reported no deliveries of the model in its quarterly statement. The automaker separately announced that an investor day is planned for March 1 to discuss long-term expansion plans, a next-generation vehicle platform, capital allocation and other topics.
–Assisted by Craig Trudell.
(Updates with stock movement during early trading in third paragraph.)
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