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Tesla shares fall on price cut, soft Model 3 deliveries

Tesla shares fall on price cut, soft Model 3 deliveries

Under a major tax overhaul passed by the Republican-controlled US Congress in 2017, tax credits that lower the cost of electric vehicles are available for the first 200,000 such vehicles sold by an automaker. In the days leading up to New Year's Eve, CEO Elon Musk took to Twitter in an effort to encourage potential customers to pull the trigger before the deadline, but didn't mention the pending price reduction.

Tesla disappointed investors Wednesday after announcing that it delivered 90,700 vehicles during the fourth quarter, more than 2,000 vehicles short of what Wall Street analysts expected. The Model 3 starts at $35,000 but still can't be purchased for under $45,000. On Jan. 1 the federal credit for Tesla buyers dropped from $7,500 to $3,750.

Tesla fell just short of its target to deliver 100,000 of its more expensive Model S and Model X vehicles for the year, selling 99,394 units.

Gary Gastelu is FoxNews.com's Automotive Editor.

Longer-term we think the price cut is more concerning. But some bearish investors are likely interpreting it as a move to stimulate demand, said Wedbush analyst Dan Ives.

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Tesla shares fell after the electric auto maker delivered fewer-than-expected Model 3 sedans in the fourth quarter and cut prices for all its vehicles in the US.

Overall, total production rose 8% to 86,555 vehicles.The company churned out 61,394 Model 3s, up from a total of 53,239 Model 3s in the third quarter. Heading into the quarter, financial analytics firm FactSet had projected the company would manufacturer 64,900 Model 3s. Tesla's own internal tracking shows its deliveries were in line with or above estimates, spokesman Dave Arnold told reporters.

CNBC reports that Elon Musk's Tesla has yet again run into another stumbling block, once again failing to meet its expected fourth quarter delivery estimates.

The company's sales included nearly 146,000 Model 3 lower-priced cars and another 99,000 examples of the more expensive Model S and Model X. The Model 3 starts at US$35,000 but still can't be purchased for under US$45,000. Customers can apply to receive the $3,750 federal tax credit for new deliveries starting on January 1, 2019, and may also be eligible for several state and local electric vehicle and utility incentives, which range up to $4,000. Craig Irwin, an analyst with Roth Capital Partners, noted that Tesla's price adjustments on its vehicles are not helping TSLA stock either.