Tesla shares drop on disappointing quarterly performance

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Tesla chief executive Elon Musk speaks during a company launch event

Tesla shares have fallen after the electric carmaker revealed that it missed expectations for deliveries and will be cutting its vehicle prices by $2,000 in the US.

The price cut, which will apply to Model S, Model X and Model 3 cars, is in response to a reduction in green tax credits.

Tesla said it delivered 90,700 vehicles in the three months to December.

Its shares fell by about 8% at the start of US trading.

Ahead of the price cut announcement, chief executive Elon Musk urged Tesla customers to make use of federal tax credits.

Worth around £6,000 ($7,500), the credits are set to reduce by half after the first 200,000 Tesla vehicle deliveries in the US.

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

In its previous results statement, the company promised to focus on increasing its production rate.

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

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