Shares in Tesla Inc dropped as much as 9 percent on Wednesday after the electric car maker cut U. S. prices for all its vehicles to offset lower green tax credits and fell short on deliveries of its mass-market Model 3 sedans in the fourth quarter.
(Reuters) – Shares in Tesla Inc ( TSLA. O) dropped as much as 9 percent on Wednesday after the electric car maker cut U. S. prices for all its vehicles to offset lower green tax credits and fell short on deliveries of its mass-market Model 3 sedans in the fourth quarter.
The price cut “naturally begs the question: If demand for Tesla vehicles is as strong as Tesla has indicated in the past, why cut price?” Bank of America analyst John Murphy wrote in a client note. “In our view, this move could suggest that what many bulls assume to be a substantial backlog … for Tesla may be less robust.”
Tesla turned a profit for the third quarter but is unprofitable for the first nine months of 2018, and cash flow remains a concern for investors.
Chief Executive Elon Musk is under intense pressure to deliver on his promise of stabilizing production for the Model 3, which is seen crucial for easing a cash crunch and achieving long-term profitability.
Musk, who has often set goals and deadlines that Tesla has failed to meet, surprised investors by delivering on his pledge to make Tesla profitable in the third quarter, for only the third time in its 15-year existence.
Tax credits on its vehicles contributed to that profit.
