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Tesla shares slide after deliveries fall short of Wall St expectations

Tesla shares tumbled on the first day of trading in 2023 after the group’s new vehicle deliveries fell short of Wall Street expectations last quarter, adding to worries that the electric carmaker faces a slowdown in demand.

The company said on Monday it delivered 405,278 vehicles in the three months to the end of December, an increase of 11 per cent from the record it hit in the preceding quarter. Most analysts had expected deliveries to reach 420,000-430,000.

The shortfall sent Tesla shares down 9 per cent at the open in New York on Tuesday. US stock markets were closed on Monday.

Tesla struggled with production and logistics challenges throughout 2022, which included the closing of its largest production plant, in Shanghai, for an extended period early in the year.

But Wall Street’s focus shifted from supply to demand late in the year as the waiting lists for its most popular vehicles shortened. In December, Tesla announced a $7,500 incentive in the US for anyone buying a Model S or Y before the end of 2022, an apparent move to shore up demand as potential customers waited for a $7,500 tax credit for electric vehicle purchases that is due to take effect in 2023.

Chief executive Elon Musk warned in December of “stormy weather ahead” as higher interest rates weighed on demand, and he has been critical of what he claims is excessive monetary tightening to tame inflation.

“The Cinderella ride is over for Tesla and Musk now needs to navigate the company through this Category 5 dark macro storm instead of focusing on his new golden child Twitter which remains a distraction,” noted Daniel Ives, an analyst at Wedbush.

Goldman Sachs cut its 2023 delivery forecast for Tesla from 1.85mn to 1.8mn on what it said was “weaker demand than we had previously expected”, though it added that positives could include a strengthening of the Chinese market over the course of the year and the new US tax credits for electric vehicles.

Tesla’s shares fell 54 per cent in the final quarter of 2022 as investors worried that the Twitter takeover could present a distraction and lead him to sell more Tesla stock, and that a period of high growth and expanding profit margins for the electric carmaker was coming to an end.

The disappointment over the fourth-quarter shortfall came despite record quarterly deliveries in the latest three months, as Tesla’s new plants in Berlin and Texas continued to increase production.

The late-year jump in sales meant that Tesla delivered just over 1.3mn new vehicles to customers in 2022, an increase of 40 per cent from the previous year. Musk had predicted early in the year that the company would hit its longer-range goal of expanding deliveries by 50 per cent annually, though he grew more cautious as the year wore on and the company was hit by Covid-related production shutdowns in China, supply chain challenges and early signs of weakening demand.

The latest figures show that production exceeded deliveries by 34,423, the third quarter in a row Tesla reported excess production. In a statement, the company suggested that logistics accounted for at least part of the problem, as it “continued to transition towards a more even regional mix of vehicle builds which again led to a further increase in cars in transit at the end of the quarter”.

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