Tesla shares dive after Musk fails to hit production target

Starting Wednesday, the company said it will be reducing the price of Model S, Model X and Model 3 vehicles in the U.S. by $2,000.
Image: Workers assemble cars on the line at a Tesla factory in Fremont, California, on Feb. 4, 2015.
Workers assemble cars on the line at a Tesla factory in Fremont, California, on Feb. 4, 2015.David Butow / Corbis via Getty Images file

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/ Source: Reuters

Tesla shares dropped sharply on Wednesday after the electric car maker delivered fewer-than-expected Model 3 sedans in the fourth quarter and cut prices for all its vehicles in the U.S. in response to the loss of a green tax credit.

The company said it delivered 63,150 Model 3s in the quarter, falling short of FactSet estimates of 64,900.

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Tesla shares dropped more than 9 percent in early trading on Monday morning.

Overall, total production rose 8 percent to 86,555 vehicles. The company produced 61,394 Model 3s, up from a total of 53,239 Model 3s in the third quarter, but showed no improvement on the 5,000 per week rate it finally achieved at the end of the third quarter.

Tesla has been struggling to ramp up production of its Model 3 sedan, which is crucial to the company's long-term profitability.

The company said in its third quarter results that it would focus in the fourth quarter on further increasing its production rate and there were indications that Wall Street had been expecting higher numbers.

Starting Wednesday, the company said it will be reducing the price of Model S, Model X and Model 3 vehicles in the U.S. by $2,000.

Tesla has been urging buyers to make use of the federal tax credit, with Chief Executive Officer Elon Musk reminding them on Twitter on Saturday that the benefit would drop to half beginning 2019.Starting Wednesday, the company said it will be reducing the price of Model S, Model X and Model 3 vehicles in the U.S. by $2,000.