Tesla Inc.’s new year is off to a rocky start, with its share price dropping as much as 10 percent today on the news that fourth-quarter vehicle deliveries missed expectations.

The stock is down nearly 7 percent in midday trading.

Wall Street’s concerns center on Tesla’s newest Model 3 sedan. The carmaker reported this morning that it shipped 63,150 Model 3s to customers in the past three months, an increase of 8 percent over the previous quarter and triple the number delivered a year ago. However, shipments still came in slightly below the average analyst projection of 63,698 units.

Tesla started ramping up Model 3 production in mid-2018 after overcoming what Chief Executive Elon Musk described as “production hell.” The billionaire entrepreneur recently revealed that the carmaker was at one point weeks away from having to close its doors.

Sales of the Model 3 have now outstripped Tesla’s two older, more expensive vehicles. The company sent out 13,500 Model S sedans and 14,050 Model X SUVs to customers in the fourth quarter, while Wall Street was looking for 14,200 Model S and 13,600 Model X shipments. As a result, Tesla ended up coming up a few hundred units shy of its goal of closing 2018 with 100,000 combined deliveries across the two models.

Another factor that dragged down the carmaker’s stock today is its unexpected announcement of a $2,000 price cut across all its vehicles. The move aims to partially offset a new reduction in the U.S. federal tax incentive available to consumers who purchase electric cars. The credit, which previously stood at $7,500, dropped to half that this morning.

The price increase and disappointing fourth-quarter deliveries will likely fuel the concerns that U.S. demand for the Model 3 has reached a peak. Those concerns came to the fore on Monday, after it was reported that Tesla had 3,000 Model 3s still sitting in its inventory.

The carmaker is looking to overseas markets for new growth. “International deliveries in Europe and China will start in February 2019. Expansion of Model 3 sales to other markets, including with a right-hand drive variant, will occur later in 2019,” Tesla said today.

The company also noted that about 75 percent of Model 3 orders in the fourth quarter came from new customers.  

Photo: Tesla