Tesla Stock Falls 12%, Posting Worst Drop in Over Two Years

“We expect challenging headlines around demand softening and associated price cuts to continue,” Deutsche Bank analysts said in a note Tuesday.

Elon Musk

‘s electric-vehicle maker said Monday that it delivered about 1.31 million vehicles last year, up roughly 40% from 2021. The total fell short of Wall Street estimates that had already come down throughout the year. Tesla also missed its initial goal of increasing deliveries by 50% or more, though it previously had signaled it would likely fall short.

Tesla, which remains the world’s largest auto maker by value, didn’t respond to a request for comment. “Long-term fundamentals are extremely strong. Short-term market madness is unpredictable,” Mr. Musk, the company’s chief executive, tweeted Friday.  

Mr. Musk suggested last month that the higher interest-rate environment was hurting vehicle demand. In a year-end sales push, Tesla offered discounts to many buyers who agreed to take delivery of vehicles before January. 

Wall Street is curbing its expectations for Tesla for the year. Deutsche Bank cut its projection of Tesla’s full-year deliveries to 1.84 million vehicles, or roughly 40% annual growth, below the average 50% growth that Tesla has been targeting. Goldman Sachs cut its 2023 Tesla delivery forecast to 1.8 million vehicles, even as its analysts said in a note that deliveries should reaccelerate in the second quarter. 

Tesla on Monday said delivery totals were hampered by changes in how the company produces cars and distributes them to customers, which left more vehicles in transit to their final destination at year-end. 

The car maker endured a tumultuous period last year. It idled its car factory in Shanghai on multiple occasions because of Covid-19 issues and also faced challenges ramping up new plants in Germany and Texas. 

Mr. Musk’s involvement with Twitter Inc., the social-media company he acquired in a deal valued at $44 billion, also has frustrated some investors and alienated some potential Tesla buyers. 

Tesla is expected to post record full-year revenue and profit for 2022 when it reports fourth-quarter results, due on Jan. 25. 

“Signs of demand destruction and the impact of recent price discounts to gross margin will be a key focus for investors as the narrative of ever expanding share gains and margin growth are needed to justify the multiple, in our view,” Cowen analysts said in a note.

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Write to Meghan Bobrowsky at [email protected]