Tesla Skids 15% After Deliveries Shortfall

The weakest stock in the S&P 500 was also hit by news that most Tesla models won't qualify for the new U.S. tax credits

Elon Musk stands in front of the newly unveiled Tesla's Cybertruck at Tesla Design Center
Frederic J. Brown / AFP via Getty Images

Tesla (TSLA) started 2023 the way it ended 2022: depressing the stock market. Its once high-flying shares dropped 15% on Tuesday after the maker of electric vehicles missed estimates for quarterly deliveries.

Tesla delivered 405,278 cars in the fourth quarter, a record for the company but short of Wall Street analysts' expectations of more than 420,000.

Tesla underperformed each of the other 499 stocks in the S&P 500 index last year with a 65% plunge that cost shareholders more than $700 billion in capital losses and stripped CEO Elon Musk of bragging rights as the richest human. The stock lost 60% between Sept. 20 and the end of the year.

Key Takeaways

  • Tesla shares plunged 15% to start the year after the maker of EVs missed fourth-quarter delivery estimates.
  • The stock was also hurt by the news most Tesla models will not qualify for new federal tax credits under the Inflation Reduction Act.
  • Analysts said the deliveries shortfall reflected dimming buyer demand for autos amid an economic slowdown.
  • Tesla's 65% decline in 2022 was the worst among S&P 500 stocks, wiping out $700 billion in shareholder wealth as Musk sold stock worth $23 billion.

The automaker cited "significant COVID and supply chain related challenges throughout the year." It also said it had more cars in transit at the end of the quarter as a result of a "transition to a more even regional mix" in production.

Wall Street blamed slowing consumer demand for Tesla's autos. Deliveries missed estimates for the third straight quarter even though the consensus target had declined in recent weeks. "Tesla sells cars, and the auto industry is slowing down,” Loup Ventures Managing Partner Gene Munster told Bloomberg.

"Tesla is facing a significant demand problem," Bernstein analyst Toni Sacconaghi Jr. wrote in a research note. Goldman Sachs lowered its share price target for Tesla to $205 from $235, while maintaining a buy rating.

Even offering a $7,500 discount—a rarity for Tesla—to buyers willing to take delivery of its vehicles before the end of December couldn't help the carmaker overcome waning demand. In addition to the rising interest rates already flagged by Musk as a business threat, Tesla will be dealing with the likelihood that most of its vehicles won't qualify for Inflation Reduction Act tax credits, based on a list unveiled by the Internal Revenue Service last week.

Tesla models are too expensive to qualify for the incentive based on the $55,000 qualifying price limit for sedans, and most aren't heavy enough to be treated as SUVs, which have a qualifying price limit of $80,000.

"This is messed up," Musk tweeted in response to a post by a former Tesla executive arguing that "Tesla is getting screwed hard" by the tax credit provisions. On the third-quarter earnings conference call, Musk assured analysts and investors Tesla's models would qualify for the tax credits.

The loss of the incentives could further erode U.S. demand amid rising competition in EVs from traditional automakers. "There is risk to both pricing and volume” for Tesla, SPEAR Invest Chief Investment Officer Ivana Delevska told Bloomberg. “Analysts are estimating 50% volume growth, which is a stretch in an environment where affordability is the focus point for the consumer.”

Musk has continued to opine primarily on politics and Twitter policies from his Twitter account during Tesla's recent skid.

Some Tesla shareholders have blamed Musk's $44 billion acquisition of Twitter and its subsequent controversies for distracting him from his duties as CEO of the automaker. Musk also sold $23 billion of Tesla's stock in 2022, including $3.6 billion in December and nearly $4 billion in November with the price in a tailspin. He recently said he's "definitely" not selling more Tesla stock in 2023.

Another concern for Tesla bulls is that Musk's political sympathies toward the right might be alienating many Tesla buyers. On Monday, Musk seconded a claim by former President Donald Trump that Trump wasn't at fault for the Republicans' performance in the midterm election, and volunteered he was "looking into" a claim by right-wing commentator Jack Posobiec that Posobiec's tweets were not appearing in his followers' Twitter timelines.

Article Sources
Investopedia requires writers to use primary sources to support their work. These include white papers, government data, original reporting, and interviews with industry experts. We also reference original research from other reputable publishers where appropriate. You can learn more about the standards we follow in producing accurate, unbiased content in our editorial policy.
  1. Tesla. "Tesla Vehicle Production & Deliveries and Date for Financial Results & Webcast for Fourth Quarter 2022."

  2. Bloomberg. "Tesla Delivers Record 405,278 Cars in Quarter But Misses Target."

  3. The Wall Street Journal. "Tesla Stock Fell 65% in 2022, Its Biggest-Ever Annual Decline."

  4. Barchart. "S&P 500 Index Components, 52-Week % Change."

  5. The Wall Street Journal. "Elon Musk’s Tesla Comes Up Short of 2022 Delivery Target as Growth Slows."

  6. MarketScreener. "Goldman Sachs Adjusts Price Target on Tesla to $205 From $235, Maintains Buy Rating."

  7. Elon Musk on Twitter. "Trend Is Concerning...."

  8. Internal Revenue Service. "Manufacturers and Models for New Qualified Clean Vehicles Purchased in 2023 or After."

  9. Teslarati. "Tesla Supporters Protest After IRA Incentives Shun Popular BEVs, Support Hybrids."

  10. Elon Musk on Twitter. "This Is Messed Up."

  11. CNBC. "Musk Says Tesla Expects to Meet Inflation Reduction Act Requirements for New Tax Credits on EVs."

  12. Bloomberg. "Tesla Stock Had the Worst Year Ever. That Doesn’t Make It Cheap."

  13. The New York Times. "Elon Musk Sells Another Big Chunk of Tesla Stock."

  14. Axios. "Musk Says He's 'Definitely' Not Selling More Tesla Stock Next Year."

  15. Car and Driver. "Will Elon Musk’s Political Rantings Drive Tesla Into the Ditch?"

  16. Elon Musk on Twitter. "Mostly Accurate TBH...."

  17. Elon Musk on Twitter. "Looking Into It."

Take the Next Step to Invest
The offers that appear in this table are from partnerships from which Investopedia receives compensation. This compensation may impact how and where listings appear. Investopedia does not include all offers available in the marketplace.