Tesla’s Stock Takes A Big Hit As The Company Deals With Losing Federal Tax Credits
Tesla’s vehicle deliveries fell short of Wall Street analysts’ expectations as the Silicon Valley automaker wrestles with the realization that its federal tax credits are quickly running out.
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 company cut prices on its vehicles by $2,000 to offset a dramatic reduction in federal tax credits.
The $7,500 credit was halved on Tuesday – the credit gets phased out after an automaker sells more than 200,000 electric vehicles. Analysts pegged Tesla to sell more than 96,000 vehicles as the fourth quarter ends. The electric car maker’s shares tumbled more than 9 percent in morning trading.
The numbers are low, but company executives believe they are still in line with forecasts. Tesla’s own internal tracking shows its deliveries were in line with or above estimates, spokesman Dave Arnold told reporters. The company tracks 22 analysts that forecast an average of 91,046 deliveries during the quarter, according to data Tesla noted.
Tesla’s tax credits are not for this world, especially as automakers continue hitting the plateau – things are getting worse. (RELATED: Extending GM’s Electric Vehicle Tax Credits Could Blow A Huge Hole In Taxpayer’s Wallets)
Republican Sen. John Barrasso of Wyoming introduced a bill in October that would end the $7,500 federal tax credit for electric cars altogether and even tax them more. Recent reports suggest lifting the cap would hurt Americans who are struggling to stay ahead of their finances.
General Motors and Tesla are two of the largest automakers seeking an extension of tax credits for those purchasing electric vehicles. GM helped create the so-called EV Drive Coalition on Nov. 13 as the two car makers approach the cap of 200,000 vehicles per manufacturer before the credits phase out.
The $7,500 tax credit will drop starting Jan. 1, 2019, to $3,750 around mid-year, according to Tesla’s website. GM is entering a similar stage — it is expected to hit the 200,000 vehicle point with sales of its Chevrolet Bolt EV, among other vehicles.
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